Vodafone Idea share price: Stock tanks over 11% after a global investment banking firm predicts 83% downside

"Vodafone Idea trades at 24x FY26E EV/EBITDA, an almost 100% premium to Bharti and Jio. We see limited reason for this premium to exist, given the weaker growth, margin returns, and balance sheet profile vs peers. We stay Sell-rated with a revised 12-m DCF-based target price of ₹2.5, implying 83% downside from current levels," Goldman Sachs said in a report.

The investment banking company predicted VI to lose another 300 basis points in market share in the next three to four years. It also pointed out that to maintain a neutral cash flow, the telco's average revenue per user (ARPU) would have to jump to ₹200-₹270, compared to ₹146 currently.

Following the development, Vodafone Idea shares were trading 11.2% lower to ₹13.3 apiece on the National Stock Exchange (NSE). The market capitalisation stands at ₹90,889.8 crore.

On the BSE, the stock was down 11% to ₹13.4 a unit.

In the first quarter of the financial year 2024-25, VI's net losses shrank to ₹6,432.1 crore, compared to ₹7,840 crore in the year-ago period and ₹7,674.6 crore in Q4 FY24.

The revenue declined 1.3% year-on-year to ₹10,508.3 crore in the April-June quarter of the current fiscal.

As of June 30, 2024, the telecom operator's total debt from banks and financial institutions stood at ₹4,650 crore and optionally convertible debentures at ₹160 crore.