Vedanta Ltd reported an inline growth in revenue growth and better-than-expected profit for the December quarter. Higher aluminium prices offset the greater alumina cost, analysts said as they see demerger of the business to be likely conclude by the end of June quarter, as Vedanta seeks lenders’ and equity shareholders’ approval on February 18. For now, analysts do not see any further dividend from Vedanta in FY25.
"Vedanta's Q3 performance came largely in line across segments. Capex plans are progressing well and will likely lead to further cost savings," said MOFSL.
The company management is targeting to maintain strong growth in earnings, led by the upcoming capacity, which will produce higher VAP products. Vedanta remained firm on its deleveraging plans. Higher cash flows will support both its expansion plan and deleveraging efforts, MOFSL said.
"The stock currently trades at 4.9 times FY27E EV/Ebitda. We largely maintain our estimates and reiterate our Neutral rating on the stock with a SoTP-based target price of Rs 500," the domestic brokerage said.
Vedanta's net debt excluding Hindustan Zinc increased 3 per cent sequentially to Rs 69500 crore in the December quarter, but is expected to fall to Rs 60,500 crore by end-FY26).
Nuvama said it does not expect any further dividend payment in FY25, but expect Vedanta to pay dividend per share of Rs 35 in FY26 and Rs 30 in FY27. The Anil Agarwal-led company has announced dividend of Rs 43.50 so far.
"We factor in an Ebitda CAGR of 22 per cent over FY24–27E to Rs 63,700 crore. We believe the aluminium segment will be the biggest growth driver, and the company will position itself in the first decile of the world cost curve by FY28E. We retain the positive stance on Vedanta amid company-specific triggers such as high dividend, cost reduction and volume growth in aluminium and zinc from FY26 and demerger of businesses, unlocking value," Nuvama said while suggesting a target of Rs 633 on the stock.