Vodafone Idea shares drop 10% as Goldman Sachs warns of losses

Shares of Vodafone Idea experienced a significant decline of 10% on Friday, following a warning from Goldman Sachs regarding the company's future market share losses. The brokerage expressed serious concerns about Vodafone Idea's ability to achieve free cash flow break-even and regain lost market share. Despite slightly raising its target price from ₹2.2 to ₹2.5, the new target still indicates a substantial 83% downside from the current market price of ₹15 per share. Goldman Sachs predicts that Vodafone Idea could lose 300 basis points in market share over the next three to four years. In contrast, Goldman Sachs has a more favorable outlook for Bharti Airtel, raising its target price from ₹900 to ₹1,700, which reflects a 10% upside potential. The firm reiterated its 'buy' rating for Airtel, citing strong growth prospects, improvements in free cash flow, and returns that justify the stock's premium valuation. Goldman Sachs anticipates that Bharti Airtel's revenue in India will grow at an annual rate of 16%, with EBITDA increasing by 21% each year from FY24 to FY27. Additionally, the firm expects Bharti Airtel to significantly reduce its net debt to near zero by FY28, which would further enhance its financial stability. On the other hand, Indus Towers was downgraded to a 'sell' rating, although its target price was increased from ₹220 to ₹350 due to concerns about its valuation relative to its fundamentals. Overall, the market reaction to these reports reflects investor sentiment regarding the competitive landscape in the telecom sector, with Vodafone Idea facing challenges while Bharti Airtel is positioned for growth.