Synopsis: The article discusses the significant 5% increase in Vedanta's stock price following better-than-expected Q4 results. It examines the implications of this surge for investors, who must decide whether to Buy, Sell, or Hold the stock. Additionally, it highlights key insights from analysts regarding Vedanta's financial performance, operational outlook, and debt management strategies.
Today in the stock market, Vedanta's shares surged over 5% during morning trading on Friday following the release of its Q4 results on Thursday, which exceeded expectations. Analysts assess whether it's advisable to Buy, Sell, or Hold the stock based on these results.
Vedanta's performance in the March quarter outpaced analyst projections, leading to a boost in share prices. The company reported a consolidated net profit of INR 2,273 crore for Q4FY24, marking a sequential decline of 21% and a year-on-year drop of 27% compared to INR 3,132 crore reported in the same quarter last year. However, this figure was affected by exceptional items, including the exclusion of custom smelting in the copper business and impairment charges related to the Sterlite Copper plant, which has been closed for several years. Additionally, higher taxes impacted Vedanta's net profit.
Despite challenges, Vedanta's operating performance exceeded expectations, with Q4FY24 Ebitda increasing by 3% sequentially to INR 8,969 crore, primarily due to increased volumes and cost-saving measures across its businesses. However, this growth was partially offset by lower base metal prices on the London Metal Exchange (LME) and exchange rate fluctuations. Despite these factors, Q4FY24 revenue remained flat sequentially at INR 34,937 crore, representing a 6% decline year-on-year.
Analysts note that Vedanta's Ebitda of INR 8,768 crore and adjusted net profit of INR 1,549 crore surpassed their estimates, with Antique Stock Broking reporting figures 3.4% above their forecast and 6.3% higher than the consensus.
Positive trends in LME prices for aluminum, copper, and zinc are seen, with prices rising from previous lows, which bodes well for Vedanta's share price. Analysts at Antique anticipate an 11% to 15% increase in FY25 and FY26 Ebitda estimates due to higher commodity prices and ongoing cost optimization initiatives. They maintain a BUY rating, citing Vedanta's low-cost producer advantage.
Nuvama Institutional Equities analysts have raised Vedanta's FY25 and FY26 Ebitda estimates by 18% and 23%, respectively, considering higher commodity prices and lower production costs in aluminum.
Analysts at Motilal Oswal Financial Services have also revised their FY26 Ebitda estimates upward by 4% to reflect an improving outlook and progressing Capex plans, which are expected to generate further cost savings.
Regarding debt, investors and analysts are monitoring Vedanta Resources and Vedanta Ltd. The net debt for Vedanta Ltd decreased sequentially to INR 56,338 crore as of March 31, 2024, while gross debt reduced to INR 71,759 crore. Analysts at Nuvama Institutional Equities believe that the company's debt may have peaked in FY24 and anticipate improved cash flows from rising commodity prices, potentially leading to a higher valuation multiple. Motilal Oswal analysts note that extending the maturity of bonds at HoldCo. by three years provides Vedanta with adequate liquidity comfort in the near term.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies. We advise investors to check with certified experts before taking any investment decisions
