Vedanta’s June quarter performance was largely in line with analyst estimates, across segments. Its capex plans are progressing well, which analysts said would lead to further cost savings. The Anil Agarwal-led company is targeting $10 billion in Ebitda, led by the upcoming capacity, which should produce higher VAP products.
Vedanta, MOFSL said, remains firm on its deleveraging plans. It believes higher cash flow going forward will support Vedanta’s expansion plan. “The stock currently trades at 5.4 times FY26E EV/Ebitda. We reiterate our Neutral rating on the stock with a revised SoTP-based target price of Rs 460,” the brokerage said.
“Vedanta aims to achieve $30 billion in annual revenue and $10 billion in EBitda, supported by ongoing operational expansions and strategic initiatives in renewable energy and low-carbon products. The company’s focus on deleveraging and the strategic demerger process are expected to enhance shareholder value and solidify its position as a leader in the metals and mining sector,” said Arihant Capital Markets.
Nuvama reduced its FY25 and FY26 Ebitda estimates by 3-8 per cent to factor in lower commodity prices on delay in demand recovery. The recent money raising via Rs 8,500 crore QIP should take care of upcoming debt repayment, and it can afford lower commodity prices without leveraging, the brokerage said.
“The earnings cut yields a reduced target price of Rs 608 (earlier Rs 644). This excludes Rs 25 dividend per share in rest of FY25 and Rs 40 in FY26. Retain ‘BUY’,” Nuvama said.
Vedanta expects to realise a higher premium going forward on account of the higher VAP product. The cost of aluminum is expected to be around $1,600 per tonne and zinc’s at $1,000 per tonne in the near to medium term. The company hedged 10 per cent of both aluminum and zinc volumes.
MOFSL noted that Vedanta is committed to execute about $8 billion of growth capex in the next few years. It is aiming to reach a production of 3,00,000 barrels per day for its oil & gas business, whereas the iron ore business in Liberia is likely to produce 30 mtpa.
“The BALCO expansion is scheduled to be commissioned this year in 4QFY25 (earlier 3QFY25), and the operation is likely to commence from 1QFY26. The Radhikapur coal block is likely to start operations by 4QFY25, having secured environmental clearance and completed stage 1 forest clearances, following compliance checks,” it said.
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