Global brokerage firm Goldman Sachs has maintained its bearish stance on Vodafone Idea, reiterating a 'sell' ratinng with a target price of Rs 2.40, signalling a potential downside of 66 per cent from Tuesday’s closing price of Rs 7.11.

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This comes after the company’s weaker-than-expected second-quarter performance and long-term operational concerns.  

Q2FY25 results: Mixed signals  
Vodafone Idea narrowed its net loss to Rs 7,176 crore in Q2FY25 from Rs 8,738 crore in the previous year. Revenue from operations rose marginally by 2 per cent year-on-year to Rs 10,932 crore. Additionally, ARPU improved to Rs 166, a 7.8 per cent quarter-on-quarter increase, driven by recent tariff hikes.  

Challenges persist  
Goldman Sachs highlighted several issues, including a shrinking market share, subdued free cash flow, and underwhelming capital expenditure compared to competitors. Despite the company being well-funded in the near term, its financial stability remains precarious due to significant AGR and spectrum-related dues starting in FY26.  

The brokerage estimates that Vodafone Idea would need an ARPU of Rs 280, a 160 per cent surge from current levels, to achieve sustainable free cash flow neutrality—a scenario deemed unlikely in the medium term.  

Valuation concerns  
Vodafone Idea’s valuation at 22x FY26E EV/EBITDA is significantly higher than Bharti Airtel's 12x, despite weaker growth prospects. Similarly, its mid-single-digit forecasted CROCI lags behind the 17-18 per cent seen by peers Bharti Airtel and Jio.  

Stock performance  
The stock slipped nearly 2 per cent on Tuesday, reflecting investor concerns. Analysts fear that even with potential equity conversion of government dues, the company’s recovery strategy lacks clarity.  

Goldman Sachs’ outlook underscores scepticism about Vodafone Idea’s ability to compete effectively and resolve its financial challenges. For investors, the risks appear substantial, with limited catalysts for a turnaround in the near future.