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Motilal Oswal Report
Motilal Oswal reiterates its neutral rating on Vedanta after Q1FY27 results were broadly in line, supported by stronger volumes and favourable LME prices. The target price set is Rs 290 vs CMP Rs 266.65, implying an approximately 8% upside. The stock trades at 7.6x FY28 EV/EBITDA, with the Zinc business contributing the largest share of the SoTP valuation.
Vedanta reported a broadly in-line Q1FY27 operating performance, with consolidated revenue at Rs 24,200 crore, up 54% YoY and flat QoQ, helped by higher LME prices, premiums and forex gains. Ebitda rose 98% YoY and 13% QoQ to Rs 8,500 crore, while margin expanded sharply to 35.1% from 30.7% in Q4FY26 and 27.1% a year ago.
Adjusted PAT beat estimates at Rs 5,300 crore versus Rs 4,700 crore expected, mainly due to lower tax expenses. The balance sheet also improved significantly, with net debt at Rs 8,300 crore and net debt/EBITDA falling to 0.3x from 0.95x in Q4FY26.
Valuation and view
Management expects earnings growth to remain healthy, aided by upcoming capacity additions, a higher mix of value-added products and supportive pricing.
Capex plans remain on track and should drive further cost savings, while stronger cash flows are expected to support both expansion and deleveraging. FY27/FY28 estimates are largely unchanged.
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