5 Reasons Vodafone Idea Share Price Plunged by 13%—What Investors Should Know
On September 6, 2024, shares of Vodafone Idea and Indus Towers experienced significant declines following a Goldman Sachs research report. Vodafone Idea’s stock dropped over 13%, hitting a 52-week low of Rs 9.55. Meanwhile, Indus Towers saw a 6% fall in its stock price after Goldman downgraded its rating from ‘Neutral’ to ‘Sell.’
Main Points
Vodafone Idea Faces Challenges
According to Goldman Sachs, Vodafone Idea is struggling to break even in terms of free cash flow and is expected to lose 300 basis points in market share over the next 3-4 years. Despite an increase in the target price from Rs 2.2 to Rs 2.5, the firm maintained its ‘Sell’ rating, predicting an 83% downside in the stock price.
Goldman’s report highlighted a challenging future for the telecom operator, even in an optimistic scenario. If the AGR dues (Adjusted Gross Revenue) are reduced by 65%, tariffs increase steadily, and there are no immediate government repayments, the best-case implied value per share for Vodafone Idea would only be Rs 19.
For a detailed report on Vodafone Idea’s market performance, click here.
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Indus Towers Downgraded Despite Recent Surge
Shares of Indus Towers also tumbled by over 6% after Goldman Sachs downgraded the stock from ‘Neutral’ to ‘Sell.’ Although the brokerage raised the target price from Rs 220 to Rs 350, it expressed concerns over the company’s valuation, stating that the recent stock surge of 75% in the past six months is overdone.
Indus Towers, currently trading at Rs 443, is 26% above Goldman’s target price of Rs 350. The disconnect between Indus’s fundamentals and its valuation was noted, especially considering Vodafone Idea, one of its major clients, is still facing financial troubles. Goldman indicated that a more optimistic stance would depend on Vodafone Idea’s ability to improve its balance sheet.
For further insights on Indus Towers and its stock performance, visit this link.
Bharti Airtel Sees Optimistic Outlook
In contrast to Vodafone Idea and Indus Towers, Bharti Airtel saw a favorable update from Goldman Sachs. The brokerage firm significantly raised its target price from Rs 900 to Rs 1,700, suggesting a 10% upside from the current market price. Goldman has maintained its ‘Buy’ rating, emphasizing Bharti Airtel’s strong growth prospects.
Bharti Airtel’s India revenue and EBITDA are expected to grow at 16% and 21% CAGR over the fiscal years 2024-2027. The firm’s balance sheet is also projected to improve, with expectations of reducing its net debt to zero by FY28.
Check out Bharti Airtel’s latest performance details here.
| Stock | Goldman Rating | Target Price | Current Price | % Change | Prediction |
|---|---|---|---|---|---|
| Vodafone Idea | Sell | Rs 2.5 | Rs 9.55 | -13% | 83% downside predicted |
| Indus Towers | Sell | Rs 350 | Rs 443 | -6% | Disconnect in valuation |
| Bharti Airtel | Buy | Rs 1,700 | Rs 1,545 | +10% | Strong growth forecast |
Goldman Sachs’ bearish outlook on Vodafone Idea and Indus Towers stems from ongoing financial difficulties and limited market growth. For Vodafone Idea, breaking even and regaining market share remains challenging, while Indus Towers faces valuation concerns despite recent stock surges. Bharti Airtel, however, is projected to thrive with steady growth, improved cash flow, and debt reduction.
