Vodafone Idea share price cracked over 14% on Friday after foreign brokerage firm Goldman Sachs predicted an 83% downside in the stock price.
Vodafone Idea share price cracked over 14% on Friday after foreign brokerage firm Goldman Sachs predicted an 83% downside in the stock price.
Vodafone Idea shares declined as much as 14.44% to a low of ₹12.91 apiece on the BSE.
Goldman Sachs maintained a ‘Sell’ rating on Vodafone Idea stocks and raised the target price marginally to ₹2.5 apiece from ₹2.2 earlier, predicting a downside of more than 83% from Thursday’s closing price.
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“Additionally, Vodafone Idea has large AGR/spectrum-related payments starting in FY26; while the government has the option of converting some dues into equity, we estimate ARPUs would have to rise by Rs 200-270 (120%-150% under different scenarios) vs Dec ‘24E levels for Vodafone Idea to be sustainably free cash flow neutral, a low probability in the medium term in our view. Excluding the impact from any such potential conversion, we expect free cash flow to be negative at least until FY31,” Goldman’s Manish Adukia said.
Vodafone Idea recently raised Rs 20,100 crore in equity through a combination of a follow-on public offer and capital infusion from promoters. In addition, the company says it intends to raise another Rs 25,000 crore bn in debt.
“For Vodafone Idea to be free cash flow (FCF) neutral, we estimate ARPUs would have to increase to 2.2-2.5x from Dec ‘24E levels by FY27E. In our base case, we forecast an annual ARPU increase of about 15%, in line with the recent increase in tariffs, which would imply Vodafone Idea would require 6-7 years of 15% annual tariff increases to be FCF neutral,” the brokerage said.
Vodafone Idea, India’s third-largest telco with a 17% revenue market share, has consistently underperformed its peers and has lost about 500 bps of revenue market share over the last 3 years.
Goldman said Vi could lose more share as its capex may lag peers.
