Neutral Vedanta; target of Rs 255: Motilal Oswal

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26 Aug, 2025 12:21

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Motilal Oswal's research report on Vedanta

Consolidated Net Sales stood at INR 366b (YoY/QoQ: +21%/-5%), 6% ahead of our estimates of INR 345b. The improved Sales was driven by higher sales volume, strategic hedging gains, and foreign exchange gains, which was partially offset by lower commodity prices. Consolidated EBITDA at INR 77b (YoY/QoQ: -26%/ -24%) is marginally lower than our estimates of INR 80b. The miss in EBITDA is mainly attributed to EBITDA miss in the Aluminum business. The Zinc India business EBITDA at INR 44b was in line with our estimates of INR 42b. However, the other major segment viz., Oil and Gas business beat our estimate of INR 19b by 8% with an EBITDA of INR 20b. Adjusted PAT at INR 16b (YoY/QoQ: -66%/-64%) missed our estimates by 41% (INR 27b) due to higher finance cost, depreciation at Zinc India, and higher depletion charge in Oil & Gas vertical. Finance cost was sharply up 36% QoQ on higher net debt on a QoQ basis.

Outlook

With a bearish outlook on metal prices and with a possibility of a ban leading to a run up, we reiterate our Neutral rating on VED as we believe the stock is fully valued in the current environment. We keep our SoTP-based TP unchanged at INR255. While we marginally reduce our aluminum price assumption, savings from captive/linkage coal should help partly offset the downtrend.

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Vedanta - 31-10-2022 - moti