Nomura India has maintained its target price of Rs 15 for Vodafone Idea Ltd (VIL) despite a recent 20% drop in the stock. The firm believes that the worst is over for VIL and that government support could significantly reduce its funding gap. Nomura estimates VIL’s Ebitda for FY26 to be Rs 22,400 crore, with part of this being allocated towards government dues, which total Rs 29,000 crore. VIL is expected to convert Rs 12,000 crore of these dues into equity, leaving Rs 17,000 crore to be covered through its Ebitda.

Nomura India projects that Vodafone Idea Ltd (VIL) will generate Rs 26,100 crore in Ebitda in FY27, while its government payments will rise significantly to Rs 43,000 crore. Of this amount, VIL is expected to convert Rs 17,000 crore into equity and pay the remaining Rs 26,000 crore from its Ebitda.

Nomura also anticipates an annual capex of Rs 20,000 crore in FY26 and FY27, which will be partly funded by VIL’s recent equity raise and additional capital as needed. With the worst behind for VIL, Nomura has upgraded its recommendation to ‘Buy’ from ‘Neutral,’ maintaining a target price of Rs 15.

Nomura India noted that the resolution of the AGR issue, which was a significant hurdle for Vodafone Idea Ltd (VIL), has improved the outlook for the company. While VIL still carries a large debt, it is expected to manage this with government support. The company is set to gradually rebuild its business and benefit from the promising future of the Indian telecom sector, driven by anticipated tariff hikes over the next two years and the monetization of 5G services.

Nomura has maintained its estimates, which include a 12% rise in ARPU and a slowdown in subscriber losses for VIL in FY25-26, followed by modest recovery in FY27. The brokerage sees potential upside to these estimates and expects VIL’s Ebitda to grow at a 15% compound annual growth rate (CAGR) between FY24 and FY27.