Vodafone Idea suffers a huge blow from Goldman Sachs report, stock falls 14%

Goldman Sachs: Friday has proved to be a very bad day for Vodafone Idea. Due to a report by global brokerage firm Goldman Sachs, the shares of the telecom company have gone down by about 14 percent. In fact, Goldman Sachs has reduced the target price for Vodafone Idea’s stock to Rs 2.5. Due to this, the company’s stock has gone down to Rs 12.92 on NSE and Rs 12.91 on BSE during Friday’s trading. By 2.30 pm, it was trading slightly at Rs 13.40. On Thursday, this stock closed at Rs 15.09.

Vodafone Idea stock may fall to Rs 2.5

Goldman Sachs has said in its report that Vodafone Idea’s stock can fall to Rs 2.5. It has fallen by about 83 percent. The brokerage firm believes that there is no improvement in Vodafone Idea’s stock for the next 3-4 years. The company recently introduced an FPO (Follow On Public Offer) to raise money from the market. Also, the promoters also invested capital in it. Due to this, the company received Rs 20,100 crore. Apart from this, the company has also made preparations to take a loan of Rs 25,000 crore. During the company’s FPO, Goldman Sachs had taken about 81 lakh shares at the rate of Rs 11. Now the brokerage firm has surprised everyone by giving such a report.

Less likely to be free cash flow positive by FY 2031

The brokerage firm has said that Vodafone Idea has to make large AGR and spectrum related payments from FY 2026. On the other hand, the government also has the option of converting some of the dues into equity. In such a situation, we estimate that ARPU (Average Revenue Per User) will increase by Rs 200-270 (about 120 to 150 percent). Vodafone Idea is less likely to remain free cash flow positive in the medium term. Goldman Sachs has said that there is little chance of free cash flow being positive by FY 2031. The company will have to increase ARPU by about 2.5 times by FY 2027. If the company is successful in doing so, it will be able to bring free cash flow to a neutral level.

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