Vodafone Idea Share Price Under Pressure: Goldman Sachs Forecasts Major Downside
In a strikingly bearish report, global brokerage firm Goldman Sachs has issued a dire warning for Vodafone Idea, predicting that the Vodafone Idea Share Price could plummet by up to 83%. The firm has set a target price of just Rs 2.5 per share, a significant drop from its current trading levels.
Market Reaction for Vodafone Idea Share Price
Following the release of Goldman Sachs’ report, Vodafone Idea Share Price took a sharp hit, falling by 14% to a low of Rs 12.91 from the previous day’s close of Rs 15.09. This immediate market reaction underscores the gravity of the brokerage’s forecast and the prevailing investor sentiment.
Financial Struggles
Vodafone Idea has been grappling with substantial financial challenges, including massive adjusted gross revenue (AGR) and spectrum-related payments due to start in FY26. Despite recent efforts to raise capital, including a Rs 20,100 crore equity infusion and plans to secure an additional Rs 25,000 crore in debt, the company’s financial outlook remains bleak.
Goldman Sachs’ Analysis
Goldman Sachs’ analysis highlights several critical issues facing Vodafone Idea. The firm estimates that for Vodafone Idea to achieve free cash flow neutrality, its Average Revenue Per User (ARPU) would need to increase by 120%-150% from December 2024 levels by FY27. This translates to an ARPU increase of Rs 200-270, a scenario deemed highly improbable in the medium term.
Moreover, Goldman Sachs forecasts a further 300 basis points of market share loss for Vodafone Idea over the next 3-4 years. The brokerage also anticipates that free cash flow will remain negative at least until FY31.
Contrasting Views
While Goldman Sachs has taken a notably pessimistic stance, other analysts have offered more optimistic perspectives. For instance, Citi has maintained a ‘Buy’ rating on Vodafone Idea Share Price, with a price target of Rs 22 per share. Citi’s analysis hinges on the potential for a favourable outcome in Vodafone Idea’s AGR Curative petition before the Supreme Court, which could significantly reduce the company’s debt burden.
Conclusion
The stark contrast in analyst opinions highlights the uncertainty surrounding Vodafone Idea’s financial future. As the company navigates its substantial debt obligations and strives for financial stability, investors will be closely watching for any developments that could impact its share price trajectory.
For now, Goldman Sachs’ prediction of an 83% plunge to Rs 2.5 Vodafone Idea Share Price serves as a sobering reminder of the challenges ahead for Vodafone Idea.
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