Vodafone Idea share price tanks 8% on Rs 25,467 cr loss in Apr-Jun quarter; should you sell your stocks?

Vodafone Idea said that coronavirus-led nationwide lockdown impacted the first-quarter numbers of the current fiscal.

Vodafone Idea share price tumbled 8 per cent to Rs 7.64 apiece, a day after the telco reported losses of Rs 25,467 crore in the April-June quarter, which were more than double of what the telecom company incurred in the preceding quarter. During the quarter the company provisioned Rs 19,440 crore towards its AGR dues. The current prices are up 193 per cent from 52-week low, while still off 40 per cent from its 52-week high. The company said that coronavirus-led nationwide lockdown impacted the first-quarter numbers. “Vodafone Idea shares are struggling to remain in two figures. Retail interest seems to be pretty higher in this counter as compared to institutions,” Vishal Wagh, Head of Research, Bonanza Portfolio Ltd, told Financial Express Online. “Till the time the share price is below Rs 10 it will remain in the weaker territory. Buying should be done above Rs 10 only,” he added.

At 10.45 AM, Vodafone Idea shares were trading 2.55 per cent down at Rs 8.04 apiece on BSE, taking the total market capitalisation to Rs 23,103.25 crore. The revenue from operations came in at Rs 10,659.3 crore for the first quarter of FY2021, against Rs 11,269.9 crore in the same period of the previous year. “Post this loss, the net worth of the company has turned negative and stands at Rs 19,492 crore. Revenue missed street expectation but EBITDA was above Street expectation due to improved margins. Vodafone Idea’s ability to continue as a going concern is highly dependent on a positive outcome on AGR matter before the Supreme Court for the payment in instalments,” said Keshav Lahoti, Associate Equity Analyst, Angel Broking Ltd.

“Considering the fact that Vodafone Idea continues to lose market share, negative net worth and losses at PAT level, we advise investors to avoid Vodafone Idea. Bharti Airtel is our preferred pick in the telecom space,” Lahoti added.

The company in an exchange filing said it has recognised an additional charge of Rs 19,440.5 crore in the April-June quarter towards adjusted gross revenue (AGR) liabilities. “We have recognised a charge of Rs 194.4 billion as an exceptional item towards the total estimated AGR liability, in addition to estimated recognised liability of Rs 460.0 billion as on March 31, 2020,” the company statement said. The total dues of Vodafone Idea stand at Rs 58,250 crore, out of which so far it has paid nearly to Rs 8,000 crore.

(The investment advice in this story is by the respective analysts of research and brokerage firm. Financial Express Online does not bear any responsibility for their investment advice. Please consult your investment advisor before investing.)