Neutral Vedanta; target of Rs 270: Motilal Oswal

Motilal Oswal's research report on Vedanta

Vedanta (VEDL) delivered the highest ever 3Q consolidated net sales at INR355b (up 4% YoY), which was 6% higher than our estimate of INR337b. The revenue was driven by higher sales volumes and favorable movements in forex, which were partially offset by a fall in commodity (input) prices.  VEDL’s consolidated EBITDA stood at INR85b (up 21% YoY), which was a 28% beat to our estimate of INR67b. EBITDA margin for 3QFY24 improved ~440bp to 24%. The beat was driven by higher volumes across business verticals and a strong focus on cost reduction initiatives. Aluminum and HZ reported the highest ever 9M volumes and they are now in the first quartile of the global aluminum and zinc mining cost curves. APAT for the quarter stood at INR20b (up 29% YoY) against our estimate of INR10b. The beat was supported by better operating performance, lower finance cost, and higher other income, which were partially offset by higher depreciation and tax outgo.

Outlook

During 9MFY24, revenue stood at INR1,034b (-5.5% YoY), EBITDA was at INR216b (-13.6% YoY), and PAT stood at INR34b (-54.1% YoY). Reiterate Neutral with a revised SoTP-based TP of INR270.