AGR ruling hits Vodafone Idea, Indus Towers hard: Shares drop up to 15%; all you need to know
Previously, Vodafone Idea had reported an AGR liability of approximately Rs 70,300 crore, including accumulated interest. However, the company's self-assessed AGR liability was significantly lower at Rs 35,400 crore.
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FollowShares of Vodafone Idea Ltd and Indus Towers on Thursday (September 19) experienced a sharp decline, with Vodafone Idea's stock hitting the 15 percent lower circuit limit and Indus Towers falling by 10 percent. The drop in share prices followed a Supreme Court ruling that dismissed Vodafone Idea's plea to re-compute its adjusted gross revenue (AGR) dues.
Previously, Vodafone Idea had reported an AGR liability of approximately Rs 70,300 crore, including accumulated interest. However, the company's self-assessed AGR liability was significantly lower at Rs 35,400 crore. The telecom operator, along with other industry players, had filed a curative petition requesting a reassessment of these dues, seeking either a reduction or waiver of the penalties. This petition was heard by the Supreme Court on August 30, with the recent ruling now confirmed.
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In response to the court's decision, Vodafone Idea shares plummeted to Rs 10.98 on the Bombay Stock Exchange (BSE), hitting the maximum allowed drop of 15 percent. The stock had already faced pressure following a recent report from global brokerage Goldman Sachs, which set a target price of just Rs 2.50 per share. Indus Towers also saw its shares decline to Rs 384.80, marking a 10 percent drop.
Vodafone Idea's financial situation remains precarious, with a gross debt of Rs 2.1 lakh crore. Of this, only about $600 million is owed to banks and financial institutions, while the remainder is payable to the Government of India for spectrum and AGR dues. These government dues are currently under moratorium until October 2025, but substantial payments will be required after that period.
The telecom giant had sought to address errors in AGR calculations and requested reductions in penalties and adjustments in interest rates. According to Goldman Sachs, Vodafone Idea's repayment obligation is projected to be $3.3 billion in FY26, escalating to $5 billion in FY27, excluding moratorium-related dues. The company's EBITDA generation post-recent tariff hikes is estimated at around $1.5 billion annually.
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Stock brokerages had previously based their target prices for Vodafone Idea on the assumption of potential relief on AGR dues. Goldman Sachs had suggested a base case target price of Rs 2.50 per share and a more optimistic target of Rs 19.50 per share under a best-case scenario. A favorable outcome in the AGR case could have significantly alleviated Vodafone Idea's debt burden, with Citi estimating potential benefits of Rs 4-5 per share or more.
