Bharti Airtel vs Vodafone Idea: Why Nomura sees 25% upside for 1 but recommends ‘Neutral’ on the other

Telecom stocks are in focus after the recent Bombay High Court decision that set aside the Telecom Department’s one-time spectrum charge demands on Bharti Airtel and Vodafone Idea. Nomura sees the move as materially positive for both, but they expect more pronounced financial significance for Vodafone Idea. However, the international brokerage house has a ‘Buy’ rating on Airtel.

What’s driving the divergence in Nomura’s recommendation for these two stocks? The brokerage house does not expect “provision reversals to be booked immediately, and we believe management might want to ascertain the likelihood of a final favourable outcome.”