InvestorQ : Why is Vodafone Idea posting such huge losses? The stock is now available at Rs.14. Is it a good time to buy that stock and is the worst over?
Mitali Bhutta made post

Why is Vodafone Idea posting such huge losses? The stock is now available at Rs.14. Is it a good time to buy that stock and is the worst over?

Answer
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Dawn Cherian answered.
1 year ago


It is hard to say if the worst is over because the pressure on stocks like Vodafone Idea has come from the entry of Reliance Jio. They have managed to beat down the price so much that Vodafone Idea is struggling to survive. In the fourth quarter the company posted a loss of Rs.4882 crore compared to Rs.5005 crore in the third quarter. The only good thing about the results is that the average revenue per user (ARPU) has gone up from Rs.89 to Rs.104. But the huge accumulated losses and the debt are a worry. There is no visibility of when the company will come back to profitability.

However, you are right in the sense that the stock has limited downside risk at Rs.14 and considering that both the Vodafone Group of UK and the Aditya Birla Group are still heavily betting on telecom, you can take a call and buy the stock. Don’t look at it as a very long term bet but surely in the short term you can see some reaction to the improvement in ARPUs. That is what you can play for. As a trade, it is a good idea!