Showdown at Vodafone Idea Ltd's Circus! Goldman Sachs Sees Rs.2.50 Pothole at Ground Zero, While Citi Aims for the Rs.22 "Deepawali Skyline!"

In the highly unpredictable world of stock markets, where bulls charge and bears claw, Goldman Sachs seems to have dressed up in full bear armor, sticking to their ‘Sell’ rating for Vodafone Idea Ltd with the precision of a seasoned pessimist.

The shares of Vodafone Idea Ltd’s (Rs.13.35)  plunged over 14% to Rs.12.91 yesterday closing at Rs.13.35 as Goldman Sachs dropped the hammer with a ‘Sell’ rating, predicting a terrifying 83% nosedive (of the share price). Photo: The Straits Times.

Their new target? A nauseating Rs.2.50 per share. Yes, you heard it right! It appears that, Goldman Sachs’ crystal ball anticipates Vodafone Idea Ltd will perform more of a belly flop than a balancing act in the near future.

However, they've been generous enough to nudge their target price upward from Rs.2.20 to a luxurious Rs.2.50 per share—because, you know, sometimes you just need that extra Rs.0.30 to feel optimistic.

Goldman Sachs’ bearish outlook stems from the concerns that Vodafone Idea’s recent capital raising exercise, although positive, will not be sufficient to halt the company's ongoing market share erosion.

According to Goldman Sachs, Vodafone Idea is likely to lose an additional 300 basis points of market share over the next 3-4 years.

The brokerage also pointed out that the company needs to significantly boost its Average Revenue Per User (ARPU) by Rs.200-270 to achieve free cash flow neutrality.

It is true that currently the company is facing a significant financial pressures, including adjusted gross revenue (AGR) and spectrum-related payments, which are expected to become substantial starting from FY26.

Goldman Sachs also feels that free cash flow would remain negative at least until FY31, further impacting investor sentiment.

Interestingly Goldman Sachs is generally considered a sell-side firm. Also, their take on Paytm Ltd has hereto been Disastrous!! Goldman Sachs invested in Paytm when it debuted on the stock market in November 2021 at Rs.2,150 per share. The rest is history.

Meanwhile, over at the optimistic corner, Citi is tossing confetti. It has maintained a ‘Buy’ rating with a target price of Rs.22 per share.

Citi's positive stance is based on the potentially favourable outcome of Vodafone Idea's AGR Curative Petition. With the Supreme Court agreeing to hear the case, there is a possibility of significantly reducing the company’s AGR debt burden. Citi estimates that such a reduction could potentially add an impressive Rs.4-5 per share, representing a significant boost to the stock’s value.

At the end, it’s a classic "Bear vs Bull" smackdown—one side sees a sinkhole at Rs.2.50, while the other shoots for the stars at Rs.22! 

Stay tuned as the Vodafone Circus continues its daring performance... with no trapeze in sight!