Vodafone Idea shares nosedive 16% in a month. What should investors do?
Vodafone Idea have fallen by 16% in one month and by 20% in the current year so far, following global brokerage firm Goldman Sachs’ commentary on the stock.
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.
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