Motilal Oswal's research report on Vedanta
Vedanta (VEDL)’s consolidated net sales stood at INR337b (down 12% YoY), in line with our estimate of INR334b. Revenue was adversely impacted by the reduction in commodity prices and lower volumes, which was partially offset by higher premiums and favorable exchange rate movement. VEDL’s consolidated EBITDA stood at INR64b (down 37% YoY), 6% miss to our estimate of INR68b. The aluminum vertical was down 19% YoY to INR18b; HZL was down 35% QoQ to INR33b and the oil and gas vertical was down 45% YoY to INR11b. All the verticals (except copper) were profitable during the quarter. VEDL’s APAT stood at INR9b (down 81% YoY) against our estimate of INR16b. The miss was led by higher finance cost, lower other income, and higher normalized effective tax rate. LME prices across the non-ferrous portfolio were down QoQ. Zinc/Lead/ Copper/Aluminum prices were down 19%/1%/5%/6% on a QoQ basis, whereas silver was up 7% QoQ. VEDL’s net debt stood at ~INR592b and net debt/EBITDA stood at 1.88x in 1QFY24 as against 1.28x as on Mar’23. VEDL paid out INR18.5 as the first interim dividend for FY24.
Outlook
We have largely retained our FY25 EBITDA and APAT forecasts. We reiterate our Neutral rating on VEDL with an SoTP-based TP of INR280. At CMP of INR278, the stock is trading at FY25E EV/EBITDA of 5.7x and FY25E P/B multiple of 2.7x.
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