Global brokerage firm Citi has maintained a ‘Buy (High Risk)’ rating on Vodafone Idea (Vi), setting a target price of ₹12. In its April 13, 2025 research note, Citi said the recent government move to convert ₹36,950 crore worth of Vi’s spectrum dues into equity—resulting in a 49% government stake—could provide crucial momentum for the company’s long-pending ₹25,000 crore debt raise.
Here's what Citi makes of #VodafoneIdea.
— NDTV Profit (@NDTVProfitIndia) April 15, 2025
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Govt Conversion Boosts Credit Rating and Liquidity
Citi noted that the upgrade to investment-grade credit rating significantly strengthens Vi’s ability to secure funding from banks, which typically require such ratings for lending. The brokerage believes this is a positive turning point for Vi’s financial recovery.
Annual Dues Significantly Lowered
Following the equity conversion, Vi’s annual dues to the government for spectrum and AGR payments have dropped significantly:
- FY26: ₹19,000 crore (down from ₹30,000 crore)
- FY27: ₹23,000 crore (down from ₹43,000 crore)
- FY28: ₹32,000 crore (down from ₹43,000 crore)
This reduction, Citi says, improves cash flow visibility and eases pressure on the company’s balance sheet.
Outlook Depends on ₹25,000 Crore Fundraise
Assuming Vi successfully raises the targeted ₹25,000 crore in bank debt, Citi projects no cash shortfall in FY26, though a gap may appear in FY27, primarily due to ₹16,500 crore in AGR dues. Vi continues to engage with the government for potential relief on this front.
A Vi spokesperson told, “With the company now returning to investment-grade, which is essential for bank lending, debt funding discussions should now move in the right direction.”
ICRA Upgrades Vi to Investment-Grade
Credit rating agency ICRA has assigned BBB- (Stable) to Vi’s long-term fund-based facilities, marking an upgrade from earlier ratings. The last rating improvement came in June 2024, when CARE Ratings moved Vi from B+ to BB+ following the successful ₹18,000 crore FPO.
🚨 BREAKING NEWS: VODAFONE IDEA CREDIT RATING UPGRADED FROM BB+ TO BBB- BY ICRA – A STRONG BOOST FOR #VODAFONEIDEA #VI pic.twitter.com/CCGpCwlFlD
— Bharat Stock Updates (@BharatStockLive) April 14, 2025
In an April 11 exchange filing, Vi confirmed “ICRA Limited has assigned BBB- (Stable) rating to the Long-Term Fund Based Facilities of the Company.”
Citi sees this rating upgrade, along with the government’s equity infusion, as two major positives that enhance the likelihood of completing the pending fundraise. A successful capital raise could also benefit Indus Towers, easing concerns around tenancy renewals and Vi’s long-term cash flows.
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Government Stake in Vi Confirmed
Risks Still Loom
Despite the positive developments, Citi retains a high-risk tag on the stock, primarily due to Vi’s over-leveraged balance sheet. Ongoing government support will be critical, especially as large debt repayments begin from October 2025, when the current moratorium ends.
Further risks include:
- Lack of relief on AGR dues following Supreme Court’s dismissal of Vi’s curative petition
- Slower-than-expected 4G subscriber growth
- Delays in 5G rollout
- Potential equity dilution, if more government dues are converted
Citi also warns that disappointing tariff hikes in the future could limit upside for the stock.
