Vedanta Shares Up 4% After Q4 Results: Why Analysts Remain Cautious

Vedanta shares were upbeat on Friday as the company posted its results for the quarter ended March. However, analysts at Kotak Securities and Motilal Oswal remain cautious on the stock.

What Happened: The mining giant reported revenue of ₹35,509 crore for the quarter ended March, reflecting a decline of 4.6% from the ₹37,930 crore recorded in the same quarter last year. Net profit for the quarter decreased by 27%, falling to ₹1,369 crore from ₹1,881 crore.

Analyst Reactions: Kotak Securities maintained its “sell” rating for the stock but raised the price target on the stock from ₹255 to ₹320. The brokerage highlighted that the consolidated EBITDA at ₹8,770 crore, surpassed its expectations by 4%,thanks to the improved margins in the oil & gas division.

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Additionally, the brokerage pointed out the management’s focus on deleveraging the parent entity, Vedanta Resources Limited (VRL), over the next three years. The brokerage said that the rise in price target was considering the hike in commodity prices.

Motilal Oswal also maintained its “neutral” rating for the Anil Agarwal-led conglomerate. The brokerage also revised the price target higher to ₹360. The brokerage said that while the mining major’s sales were in line with its estimates, adjusted net profit missed expectations. The brokerage said that lower ‘other
income' and higher tax outgo adversely impacted the adjusted profit after tax.

Price Action: Vedanta’s share price was up 4.26% to trade at ₹397.30 in the late hours of trading on Friday.

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Posted In: Analyst ColorEarningsEquitiesNewsPrice TargetReiterationMarketsAnalyst RatingsMoversTrading IdeasVedanta