CLSA has upgraded Vedanta's rating from 'reduce' to 'buy' and raised the target price to Rs 390 from Rs 360 with an eye on the rise in commodity prices.
Following the rating upgrade, shares of Vedanta rose as much as 7.7 percent to hit a 52-week high of Rs 364.60 on April 10. In the past year, stock has gained 34 percent.
The company is favourably positioned to capitalise on the commodity upcycle, thanks to its diversified exposure. Moreover, its ongoing efforts to enhance capacity and profitability across various segments bode well for future prospects, the report said.
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The company has indicated a growth trajectory, with the group EBITDA expected to rise from $5 billion to $6-$7.5 billion by FY25/27. Although the parent company has seen a significant decline in debt, Vedanta's leverage has increased. Observing this leverage trend and the corporate structure will be crucial moving forward, it said.
A report by news agency PTI said BlackRock, Abu Dhabi Investment Authority, ICICI Mutual Fund, and Nippon India Mutual Fund have collectively raised their holdings in Vedanta by nearly 2 percent over the past four months, according to market sources.
Foreign institutional investors (FIIs) too have increased their stakes in the conglomerate by 1.2 percent in the same period. The recent surge in Vedanta's share price, driven by demerger plans, deleveraging, and rising metal prices, has prompted bullish sentiment from both domestic and international funds, the PTI report said.
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