Vedanta: Motilal Oswal said profit missed its estimate of Rs 3,700 crore. The miss was led by higher finance cost and depreciation, partially offset by higher other income and lower taxes, it said. 
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Vedanta: Motilal Oswal said profit missed its estimate of Rs 3,700 crore. The miss was led by higher finance cost and depreciation, partially offset by higher other income and lower taxes, it said. Post Vedanta's March quarter results, analysts largely believe aluminium prices may soften in FY24 but expect cost reduction to lead to improvement in margins. Given parent Vedanta Resources' debt obligations, they believe Vedanta may keep paying higher dividends going ahead but are mixed on the stock's prospects, with a neutral-to-positive stance.
Nuvama Institutional Equities noted that Vedanta Resources’ debt obligation stood at $2 billion (it repaid $1 billion in Q1FY24, total debt remains $7 billion).
"We believe Vedanta will continue pay higher dividend in FY24E/FY25E and accordingly factor in dividend per share of Rs 45 in each of FY24E/FY25E. Vedanta is awaiting final approval from lenders to shift Rs 12,590 crore from general reserve to retained earnings, which will help in dividend payment," it said.
The benefits from cost savings in aluminium via the 3 MTPA alumina expansion; and all coal blocks starting, will show from FY25E and reduce cost of production (CoP) on a structural-basis.
"Consolidated net debt will rise to Rs 65,699 crore (FY23: Rs 55,300 crore) due to higher dividend payout. A 16 per cent dividend yield makes the stock attractive," Nuvama said while slashing its 12-month share price target to Rs 367 from Rs 428 earlier.
The Anil Agarwal company said its consolidated profit plunged 57 per cent year-on-year (YoY) to Rs 3,132 crore for the March quarter compared with Rs 7,261 crore in the same quarter last year. Net sales for the quarter fell 5 per cent YoY to Rs 37,225 crore from Rs 39,342 crore in the corresponding quarter last year.
Motilal Oswal said profit missed its estimate of Rs 3,700 crore. The miss was led by higher finance cost and depreciation, partially offset by higher other income and lower taxes, it said.
Globally, the commodities market is facing multiple headwinds such as inflationary pressure, weak macroeconomic scenario, recessionary pressures across Europe, liquidity crunch across some developing countries, muted demand pick-up from China and slowdown in Chinese real estate sector, it said.
"We have largely retained our FY24 Ebitda and APAT forecasts. We reiterate our Neutral rating on Vedanta with an SoTP-based TP of Rs 280. At CMP of Rs 275, the stock is trading at FY24E EV/Ebitda of 5.3 times and FY24E P/B multiple of 2.2 times. While we marginally reduce our aluminum volume and EBITDA/tonne assumptions, savings from captive/linkage coal should help offset the downtrend," it said.
Kotak Institutional Equities said Vedanta's Ebitda for the quarter came higher than its estimate led by lower costs across—aluminum, Zinc International and steel division. Vedanta, it said, is witnessing delays in expansion projects across divisions and a subdued commodity price environment should keep earnings range-bound in the medium term.
"Muted earnings and pickup in capex keep FCF negative in FY2024-25E. Substantial repayments at parent VRL over FY2024-25E remains a key overhang, in our view. We trim earnings and Fair Value to Rs 235," it said while suggesting a 'sell' on the stock.
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