Telecom Stocks Outlook
Goldman Sachs' view may keep Vodafone Idea dn
This story was originally published at 22:17 IST on 6 September 2024
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MUMBAI - Shares of Vodafone Idea are likely to extend their losses for the second straight session on Monday as bearish views from Goldman Sachs may continue to weigh on the stock. The foreign broking firm reportedly said it expects the stock to fall more than 80% as it anticipates a further fall in the company's market share.
Goldman Sachs expects the telecom player to lose its market share by 3 percentage points over the next 3-4 years. The brokerage house has a 'sell' rating on the stock, with a target price of 2.5 rupees, which is much lower than its closing price of 13.35 rupees on the National Stock Exchange today.
Moreover, the brokerage expects the company's free cash flow to remain negative at least till 2030-31 (Apr-Mar). This is partly because Vodafone Idea's adjusted gross revenue and spectrum-related payments are expected to begin from 2025-26, Goldman Sachs said. "Vodafone Idea trades at 24x FY26E EV/EBITDA, an almost 100% premium to Bharti and Jio. We see limited reason for this premium to exist, given the weaker growth, margin returns, and balance sheet profile vs peers," The Economic Times reported, attributing Goldman Sachs.
The stock hit its lower circuit of 13.58 rupees following the report. Also, the trading volume rose 563% from the previous day to 1.9 bln shares today, which is also about four times the one-month daily average volume of more than 449 mln shares.
Among other players, Bharti Airtel and Reliance Industries are likely to see muted movement next week, which might be in tandem with the overall market's movement, according to research analysts. Both stocks fell over 3% each from the previous week.
The Indian stock market is expected to move in a narrow range next week in the absence of major domestic triggers as well as till the outcome of the policy meeting of the US Federal Reserve on Sep 18. The Federal Reserve is widely expected to trim rates this time and there are divided views on the quantum of cuts, with some market participants anticipating a reduction of 25 basis points and others seeing a 50-bps cut.
TOP HEADLINES
* Bharti Airtel deploys additional spectrum across Assam, Northeast
* Bharti Airtel deploys additional spectrum across Rajasthan
* Bharti Airtel tests new tech to achieve 300 Mbps uplink speed
* NCLT Mumbai approves RIL's Viacom18, Walt Disney's Star India deal
* NCLT Mumbai approves Viacom 18, Star India deal
Following are the resistance and support levels for the sector's key stocks for next week, as per calculations based on their prices on the National Stock Exchange:
| Company | Price | Week-on-week change in % | Resistance | Support |
| Bharti Airtel | 1,539.25 | (-)3.10 | 1567.10 | 1516.30 |
| Mahanagar Telephone Nigam | 55.73 | (-)7.60 | 59.40 | 53.70 |
| Reliance Industries | 2929.65 | (-)3.00 | 3019.70 | 2878.20 |
| Tata Communications | 1941.35 | (-)1.00 | 1994.30 | 1912.50 |
| Tata Teleservices Maharashtra | 91.23 | (-)6.10 | 95.90 | 88.60 |
| Vodafone Idea | 13.35 | (-)14.60 | 15.50 | 11.80 |
| Nifty 50 | 24852.15 | (-)1.50 | 25308.20 | 24573.30 |
| S&P BSE Sensex | 81183.93 | (-)1.40 | 82746.40 | 80200.70 |
End
Reported by Anjana Therese Antony
Edited by Tanima Banerjee
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