Stock Market Today: Vedanta Ltd share price has risen 76% year-to-date. The rising base metal prices as that of Aluminium Zinc and others have led to improved revenue visibility for the Vedanta Ltd. The Aluminium on the London metal Exchange that were close to $2150 a tone in mid January are now trading at close to $2500 a tonne. Zinc prices too from close to $2300 a tonne in February , now are trading above $2800 a tonne. The rising bae metal prices have triggered the Vedanta share price. Analysts however see more upside for Vedanta looking at lower Aluminium cost of Production that will boost the segments profitability further
Nuvama Institutional Equities said that Insights into cost-reduction initiatives and value-addition at Vedanta following their recent plants visits (Aluminium at Jharsuguda, Odisha, and zinc mines and smelter at Dariba, Rajasthan) are reassuring. They have increased their target price fpr the stock to ₹644 from ₹542 earlier. This indicates more than 40% upside for Vedanta. Motilal Oswal Financial Services also says that ; focus on structural cost rationalization is likely to drive earnings. MOFSL target price of ₹500, also indicates more than 10% upside.
Analysts bullish on Aluminium segment prospects-
Analysts at Axis Securities said that at the current LME Aluminium prices, the Aluminium segment is making an Ebitda per tonne of $1,000-1,050 a tonne (versus. $598 a tonne in Q4FY24). As the same is positive for Vedanta earnings, Vedanta is targeting to achieve Aluminium segment’s Ebitda per tonne of $1,350 a tonne. . The company is increasing its Aluminium production to 3.1 mtpa (million tonne per annum) from 2.4 mtpa in FY24 and the work is on track as per analysts.
Nuvama Institutional Equities said that Insights into cost-reduction initiatives and value-addition at Vedanta following their recent plants visits (Aluminium at Jharsuguda, Odisha, and zinc mines and smelter at Dariba, Rajasthan) are reassuring. They have increased their target price fpr the stock to ₹644 from ₹542 earlier. This indicates more than 40% upside for Vedanta. Motilal Oswal Financial Services also says that ; focus on structural cost rationalization is likely to drive earnings. MOFSL target price of ₹500, also indicates more than 10% upside.
Zinc Segment prospects also remain firm
Zinc India Guidance remains unchanged for mined and refined metal for FY25 as per analysts at Axis Securities. FY25 Mined metal is expected to be between 1,100-1,125kt (1.2MT target) and refined metal production is in the range of 1,075-1,100kt as per them.
Nuvama analysts on the other hand say that their visit to Vedanta’s 65% subsidiary Hindustan Zinc’s SK mine and Dariba smelter reinforced our conviction on its low-cost status (first decile of world cost curve)
All eyes on Demerger
The demerger is on track and anllysts at Motilal Oswal Finacial Services anticipated to be completed by the end of CY24. The company has obtained clearance from nearly all stakeholders, said analysts. Analysts at Nuvama however expect the demerger to be completed by end-FY25, which as per them should unlock value for minority shareholders
Analysts at Axis Securities said that Demerger will result in 6 pure-play businesses with a high degree of homogeneity. Nevertheless Debt split across demerged entities will be a key monitorable to watch out for going ahead.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions
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Published: 18 Jun 2024, 04:31 PM IST
