Goldman Sachs reiterates 'sell' on Vodafone Idea; sees 66% downside

Global brokerage steadfast Goldman Sachs has maintained its bearish stance connected Vodafone Idea, reiterating a 'sell' ratinng with a people terms of Rs 2.40, signalling a imaginable downside of 66 per cent from Tuesday’s closing terms of Rs 7.11.

This comes aft the company’s weaker-than-expected second-quarter show and semipermanent operational concerns.  

Q2FY25 results: Mixed signals  
Vodafone Idea narrowed its nett nonaccomplishment to Rs 7,176 crore successful Q2FY25 from Rs 8,738 crore successful the erstwhile year. Revenue from operations roseate marginally by 2 per cent year-on-year to Rs 10,932 crore. Additionally, ARPU improved to Rs 166, a 7.8 per cent quarter-on-quarter increase, driven by caller tariff hikes.  

Challenges persist  
Goldman Sachs highlighted respective issues, including a shrinking marketplace share, subdued escaped currency flow, and underwhelming superior expenditure compared to competitors. Despite the institution being well-funded successful the adjacent term, its fiscal stableness remains precarious owed to important AGR and spectrum-related dues starting successful FY26.  

The brokerage estimates that Vodafone Idea would request an ARPU of Rs 280, a 160 per cent surge from existent levels, to execute sustainable escaped currency travel neutrality—a script deemed improbable successful the mean term.  

Valuation concerns  
Vodafone Idea’s valuation astatine 22x FY26E EV/EBITDA is importantly higher than Bharti Airtel's 12x, contempt weaker maturation prospects. Similarly, its mid-single-digit forecasted CROCI lags down the 17-18 per cent seen by peers Bharti Airtel and Jio.  

Stock performance  
The banal slipped astir 2 per cent connected Tuesday, reflecting capitalist concerns. Analysts fearfulness that adjacent with imaginable equity conversion of authorities dues, the company’s betterment strategy lacks clarity.  

Goldman Sachs’ outlook underscores scepticism astir Vodafone Idea’s quality to vie efficaciously and resoluteness its fiscal challenges. For investors, the risks look substantial, with constricted catalysts for a turnaround successful the adjacent future.