The global brokerage firm Goldman Sachs, earlier in the last week, had given a target price of just Rs 2.5 and signaled a downside potential of as deep as 83%, following which the shares of the company tanked up to 14% in an intraday trade.
Arguing that Vodafone Idea’s recent capital raise, while incrementally positive, is unlikely to be adequate to stop the company’s market share erosion, Goldman has forecast another 300 bps share loss for the company over the next 3-4 years.
This came a few days after the Supreme Court had agreed to hear the company’s curative petition in the AGR case, where the company was seeking three key remedies. First, correction of any errors in the AGR demand calculations; second, a reduction of the penalty to 50% of the total shortfall amount and third, an adjustment of the interest rate on the penalty to 2% above the State Bank of India’s prime lending rate.
The update helped the stock in gaining the much-needed positive sentiment.
Following the recent update, here is what you can expect from the stock:“IDEA is one of the volatile and low value stocks in the F&O segment. Due to its lower price many participants get interest in it but Technical structure is mix and bounce are not accompanied by follow up buying interest,” said Chandan Taparia, Head – Equity Derivatives & Technicals, Wealth Management at Motilal Oswal.The stock had made a lifetime high of Rs 121 in the year 2015 and after that it drifted towards Rs 2.40 in the 2019. However, in the last four years some bounce was seen broadly this stock traded in between Rs 5 to Rs 19 per share.
“Looking at the monthly chart it failed to hold the previous hurdle of Rs 18.40 zones and drifted towards Rs 13 levels. It has major support at 11.80 zones which worked as a multiple support in the months of March, April and May 2024,” Taparia added.
Chandan Taparia suggests that the overall structure of the stock is weak if considered in a bigger time frame but on a short term perspective it has multiple support near Rs 11.80 zones and with this support it can bounce up to Rs 16-18 zones while below Rs 11.80, further weakness could take the stock to one digit number.
Echoing the same sentiment, Jatin Gedia, Technical Research Analyst at Sharekhan also stated that Vodafone Idea shares have been consolidating in a range of Rs 11-19 since the last eight months.
The consolidation comes in after a 300% appreciation in the stock price from Rs 6 to Rs 18.
“The fall during the last week has weakened the structure and is now heading towards the lower end of the consolidation range i.e Rs 11. So from the current market price – Rs 13.55 there is a downside of 18-20%. On the upside, Rs 15.60 – 16.00 is the immediate hurdle,” Gedia added.
Vodafone Idea had also raised Rs 20,100 crore in equity through a combination of a follow-on public offer and capital infusion from promoters.
Vodafone Idea, India’s third-largest telco with 17% revenue market share, has consistently underperformed peers and has lost about 500 bps of revenue market share over the last 3 years.
On Tuesday, the shares of Vodafone Idea closed 2.5% higher at Rs 13.53 on BSE.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)