Neutral Vedanta; target of Rs 280 : Motilal Oswal

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26 Aug, 2025 12:21

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Vedanta (VEDL)’s consolidated net sales stood at INR379b (down 5% YoY/up 11% QoQ) in 4QFY23, 7% above our estimate of INR353b. Revenue growth was fueled by better performance across all the verticals (especially aluminum, copper and iron ore) during the quarter. VEDL’s consolidated EBITDA was at INR95b (down 31% YoY/up 34% QoQ) in 4QFY23, in line with our estimate of INR91b. Aluminum vertical grew 93% QoQ to INR19b; HZL was up 15% QoQ to INR43b and iron ore vertical jumped ~5x QoQ to INR3.6b. All the verticals were profitable during the quarter. VEDL’s APAT stood at INR32b (down 50% YoY/up 106% QoQ) against our estimate of INR37b. The miss was led by higher finance cost and depreciation, partially offset by higher other income and lower taxes. LME prices across the non-ferrous portfolio improved QoQ. Zinc/Lead/ Copper/Aluminum prices were up 4%/2%/12%/3% on a QoQ basis. The company’s sales volumes across the sector improved QoQ (except the oil & gas vertical). Sales for steel/aluminum/zinc/iron ore rose 30%/2%/5%/ 21% in 4QFY23. VEDL’s net debt stood at ~INR445b and net debt/EBITDA rose to 1.3x in FY23 from 0.5x in FY22. Coal linkage for the aluminum business stood at 66% and with the commissioning of Jamkhani mines it should improve further to 80% by endFY24, thereby lowering CoP in the coming quarters. VEDL’s total dividend payout for FY23 stood at INR101.5 per share.

We have largely retained our FY24 EBITDA and APAT forecasts. We reiterate our Neutral rating on VEDL with an SoTP-based TP of INR280. At CMP of INR275, the stock is trading at FY24E EV/EBITDA of 5.3x and FY24E P/B multiple of 2.2x.

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