As Vodafone Idea shares dive 10% and more, here's a look at what analysts had to say about it prospect in recent weeks
Vodafone Idea’s shares plunged by over 10% on August 3, a day after Kumar Mangalam Birla offered to give up his 27% stake in the telco.
- In the last one month, the Vodafone Idea stock has lost a fifth of its value.
- Analysts at Goldman Sachs estimate a further decline of 60% in Vodafone Idea’s share price.
AdvertisementVodafone Idea is struggling – not just in terms of subscribers, revenue, spiraling debt and competition, but also in terms of its share price.
In the last one month, Vodafone Idea’s share price has lost a fifth of its value. Half of that fall is from today. As of 11:50 a.m., Vodafone Idea’s shares are down by over 10%, trading at ₹7.38 a share.
Things are so dire for the telco that its Indian promoter, Kumar Mangalam Birla, has offered to give up his 27% stake in the company to any entity that wants to keep running Vodafone Idea.
It is with a sense of duty towards 27 crore Indians connected by VIL, I am more than willing to hand over my stake in the company to any entity-public sector/government/domestic financial entity or any other that the government may consider worthy of keeping the company as a going concern.
With one of the lead promoters ready to throw in the towel, it is understandable that investors are running away from the stock.
Analysts are not optimistic about the company’s prospects, either.
In a report dated July 29, Goldman Sachs maintained its ‘Sell’ rating for Vodafone Idea, with the target price set at ₹3 per share, suggesting that there is a further likelihood of a 60% decline in the telco’s share price.
Vodafone Idea’s first installment towards repayment of the ₹50,000 crore adjusted gross revenue dues also begins in December this year, which means that the telco is staring at an immediate liability of ₹5,000 crore. The company’s entire market value is a little over ₹21,000 crore now.
“It is well-flagged that Vodafone Idea has large repayments due starting Dec ‘21, and its balance sheet is stressed,” the report adds.
The AGR installments, combined with deferred spectrum dues of ₹8,292 crore means the company needs funds right now and it seems to be a tougher task than earlier imagined.
“If Vodafone Idea is unable to repair its balance sheet quickly, we see an accelerated erosion in the company’s market share,” the report explains.
Vodafone Idea has lost over 51 million subscribers since Jan 2020
Nothing describes Vodafone Idea’s downward spiral better than the rate at which it has been losing subscribers. Since the beginning of 2020, the telco has lost over 51 million subscribers.
In comparison, Jio has added nearly 62 million new subscribers, while Airtel has added over 21 million.
AdvertisementTo make matters worse, Vodafone is losing the relatively lucrative 4G subscribers, too – in May, for each 2G/3G subscriber it lost, three 4G subscribers also ported out from the operator.
A Jefferies report dated July 29 suggests that the decline in Vodafone Idea’s subscribers during the second wave of Covid is similar to the first wave.
Overall, since the beginning of 2020, Vodafone Idea has lost 5.1 percentage points when it comes to active subscribers market share. In January 2020, its market share stood at 30.1%, which is now at 25%.
Birla is reportedly ready to give Vodafone Idea to the Indian government
Vodafone Idea sinks nearly 10% and Airtel tumbles a bit after India’s Supreme Court denies a discount on past dues
Cost cutting is not helping Vodafone Idea, fresh funds might — but ‘nothing is coming’
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