Vedanta stock jumped 7 per cent in Friday’s trade amid heavy volumes, taking its four-day rise to 16 per cent. Analyst price targets on the stock post its September quarter results, suggest limited upside potential on the counter. The scrip rose 7.37 per cent to hit a high of Rs 324.65 on BSE. A total of 14.95 lakh shares changed hands on BSE so far against a two-week average of 7.82 lakh shares.
The scrip has gained 15.57 per cent in four days to Friday but is still down almost 10 per cent year-to-date. The BSE Sensex is up 2.6 per cent during the same period.
The average target price on the stock at Rs 327.50 suggests a 2 per cent upside potential, suggests publicly available data with Trendlyne.
Vedanta’s profit dropped 60.80 per cent to Rs 1,808 crore in the September quarter compared with Rs 4,615 crore in the year-ago quarter. Consolidated income for the quarter rose to Rs 37,351 crore from Rs 31,074 crore last year.
Nuvama Institutional Equities expects December to be a weak quarter for Vedanta amid persistently lower prices, absence of hedging, partially offset by lower CoP and higher volume. This is even as cost savings from captive coal provide mid-term visibility on earnings growth. The brokerage has a target price of Rs 355, valuing Vedanta at 5 times FY24 EV/Ebitda.
The brokerage said cost savings in aluminium via 3mtpa alumina expansion in FY24E, aluminium expansion at Balco and usage of captive coal (mining to start in Q3FY23) provide mid-term visibility on earnings growth.
While the company continues to focus on the debt and cost management, the challenging macro environment globally is likely to weigh on any improvement in LME prices, Motilal Oswal said.
“With a bearish outlook on metal prices and with a possibility of a ban leading to a run up, we reiterate our ‘Neutral’ rating on Vedanta as we believe the stock is fully valued in the current environment. We keep our SoTP-based TP unchanged at Rs 255. While we marginally reduce our aluminum price assumption, savings from captive/linkage coal should help partly offset the downtrend,” it said.
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