Vedanta is a prime beneficiary of the surge in commodity prices. Aluminium division is expected to drive the majority of earnings aided by better volumes, lower costs and potentially better LME (aluminium demand-supply likely to be favourable). Power segment and zinc shall play a supporting role.
NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
ICICI Securities Report
Vedanta Ltd. is a ‘Pure Commodity Play’ and will likely be the biggest beneficiary of an increase commodity prices or INR devaluation.
Aluminium/zinc/silver contribute over 80% of Ebitda and the company has good growth plans for these segments, enabling the growth story to remain intact.
Additionally, the aluminium segment would see backward integration into bauxite–alumina–coal, which would make Vedanta one of the lowest cost producers.
Despite huge capex plans, we expect debt to remain in check, as the company is expected to generate good cash flows. However, we believe that the dividend story may take a backseat, considering Vedanta’s resources’ debt repayment and servicing requirements are falling gradually ($450–500 million requirement for the next year and thereafter).
Potential acquisition of JAL would lead to EPS erosion; thus, may impact our valuations in future.
We are rolling over our target multiple to FY28E and valuing the company on an SoTP basis with a target price Rs 590. Maintain Buy.
Key risks
Delay in commissioning of coal mines/bauxite projects in aluminium division.
Deterioration in global economic environment due to trade war.
Click on the attachment to read the full report:
DISCLAIMER
This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.
RECOMMENDED FOR YOU
Vedanta Q2 Preview: Tailwinds In Ferrous Movement, Diverse Portfolio Has Analysts Bullish
Vedanta Q2 Results: Date, Earnings Call Details, Share Price History And More
End Of Twitter.com: X To Retire Domain Name — Check How To Retain Accounts
Buy, Sell Or Hold: Suzlon Energy, Infosys, Tata Motors, Vedanta, Varun Beverages — Ask Profit
POPULAR