Vedanta (NYSE: VEDL) Ltd, a major player in the mining industry, reported a Q2 net loss of Rs 1,783 crore, a significant departure from the Rs 1,808 crore profit recorded in the same quarter last year due to the implications of a new tax regime. Despite this setback, the company achieved record turnover and Ebitda, with figures standing at Rs 38,945 crore and Rs 11,834 crore, respectively. These impressive results were attributed to aggressive cost-cutting measures and efficient operational performance.
However, following Vedanta’s Q2 performance, which fell short of market expectations, coupled with concerns regarding capital expenditure (capex) and debt repayment impacting dividend payouts, analysts have recalibrated their share price targets. Motilal Oswal Securities has maintained a neutral rating on Vedanta but reduced their FY25 Ebitda estimate by 4%, resulting in a Sum-of-the-Parts (SoTP)-based target price of Rs 220. In addition, Antique Stock Broking foresees subdued commodity prices affecting profitability and the higher FY24 capex guidance of $1.7 billion constraining dividend distributions.
On a more optimistic note, Nuvama Institutional Equities has shifted to a positive outlook on Vedanta, citing improvements in debt management and the potential cash flow increase expected from the completion of aluminium projects in FY25. They have retained a ‘Hold’ rating while revising their target price to Rs 265.
Regarding its financial health, Vedanta faces a $3.1 billion debt maturing in FY25. The proposed sale of steel and iron ore assets is seen as a significant step towards reducing debt levels. Nonetheless, Vedanta’s stock has experienced a decline of 26.34% year-to-date.
