Shares of Vodafone Idea continued their downward trend, slipping 3.7% to an intraday low of Rs 13.03 despite recent buying activity by the company’s promoter, Kumar Mangalam Birla. This comes as the stock has faced significant pressure in recent days, influenced by negative analyst ratings.
Kumar Mangalam Birla's Purchase
On September 6, Kumar Mangalam Birla acquired 1.86 crore shares of Vodafone Idea, signaling his confidence in the company. Additionally, Pilani Investment purchased 30 lakh shares on the same date.
Market Reaction and Analyst Ratings
Despite these substantial purchases, the stock has been in a selling spree since September 6. The trigger was a research report by Goldman Sachs, which gave Vodafone Idea a “Sell” rating. Goldman Sachs projected an 83% downside in the stock price, setting a target of Rs 2.5 per equity share, up from a previous target of Rs 2.2.
Stock Performance
Following the report, Vodafone Idea's stock plummeted over 11% on the day of the announcement. The brokerage firm's analysis highlighted a direct correlation between capital expenditure (capex) and revenue market share. Given the expectation that peers would spend at least 50% higher capex compared to Vodafone Idea, the firm forecasted an additional 300 basis points market share loss for Vodafone Idea over the next 3-4 years.
Recent Trends
In the last five days, Vodafone Idea’s stock has declined almost 12%. Over the past month, it has erased around 18% of investors’ wealth. The stock has depreciated over 4% in the last six months and has fallen more than 22% year-to-date. However, in a long-term perspective, the stock has delivered a return of 144% over the past five years.
Comparative Market Performance
To provide context, the benchmark Nifty 50 has experienced a slight fall of over 1% in the last five days but has risen more than 2% in the past month, highlighting the relative underperformance of Vodafone Idea.
Conclusion:
The recent slump in Vodafone Idea’s stock, despite significant insider purchases, underscores the market's reaction to bearish analyst forecasts. With ongoing challenges and high capex needs compared to its competitors, the company faces a tough road ahead. Investors are closely monitoring these developments to gauge the future trajectory of Vodafone Idea’s stock.