Vedanta share price targets see revisions post Q4; Buy stock, say analysts

Vedanta Q4 results managed to impress a couple of analysts, who upped their Ebitda estimates and, thus, price targets on the stock, citing rising commodity prices and ease in debt. Rising commodity prices not only improves cash flows but open up the potential of increasing the valuation multiple too, as debt overhang should subside significantly, said Nuvama Institutional Equities.

"We are jacking up Vedanta's FY25/26 Ebitda estimates by 18 per cent/23 per cent factoring in higher commodity prices and lower CoP in aluminium. We believe the company’s debt peaked out in FY24. The aforesaid upward earnings revision lifts the target price to Rs 542 (earlier Rs 394); reiterate ‘BUY’," Nuvama said.

Antique Stock Broking said it likes Vedanta's low-cost producer advantage. It factored in 6 per cent higher aluminum and 9 per cent higher zinc prices, which raised our FY25/FY26 Ebitda estimates by 11 per cent/ 15 per cent. This brokerage upped its target price on Vedanta to Rs 411 from Rs 318 earlier, with an implied FY26 EV/Ebitda multiple of 4.2 times, in line with global peers.

Vedanta Ltd reported a 27.21 per cent year-on-year (YoY) drop in consolidated net profit (attributable to owners of Vedanta) at Rs 1,369 crore for the March quarter compared with Rs 1,881 crore in the same quarter last year. The consolidated revenue from operations fell 6.14 per cent YoY to Rs 34,937 crore from Rs 37,225 crore in the corresponding quarter last year. Vedanta said sales were flattish despite lower LME and exchange rate fluctuations.

For Motilal Oswal, Vedanta's Q4 performance came largely in line with expectations. Extending the maturity of bonds at the holding company by three years offers the company adequate liquidity comfort in the near term, it said adding that the capex plans are progressing well, leading to further cost savings.

"VEDL currently trades at 6.9x FY26E EV/EBITDA. We marginally increase our Ebitda estimates by 4 per cent in FY26 to incorporate the improving outlook. We reiterate our Neutral rating on VEDL with a revised SoTP-based target of Rs 360," Motilal Oswal said.