Vedanta shares surge 4% on robust Q1 result
Shares of Vedanta Ltd surged 4% in the early morning trade on Wednesday after the metal-to-mining giant recorded a 54% rise in Q1 net profit. Shares opened higher at ₹423.80 on the BSE, hit the day's high at ₹433.60 and are currently (10.30 am) trading at ₹413.60, down 18% compared to a one-year high of ₹506.85 touched on May 22, 2024.
At the current share price, Vedanta's m-cap stands at ₹1.68 lakh crore. Vedanta's one-year return stands at 81.34%, while in the year-to-date period, the company gave a 67.37% return. Brokerage PhillipCapital in its latest report on Vedanta maintains a "BUY" call with a price target of ₹552, up 33% from yesterday's closing price.
"We continue to hold our positive outlook on the company as we feel the commodity prices have legroom to improve from here aided by FED rate cuts and potential stimulus in China. The demerger of business rating upgrades will augur well for the company. With debt-related issues largely settled in the medium term, the company continues to focus on growth and guiding for US$ 7.5-10bn of EBITDA in future (we have taken a conservative stance at US$ 6bn). We have kept our SOTP target price unchanged at ₹550. Maintain BUY," says the brokerage house.
Anil Agarwal-led Vedanta Ltd reported a 54% year-on-year jump in its net profit at ₹5,095 crore for April-June quarter of 2024-25 compared to ₹3,308 crore in Q1 FY24, Vedanta said in an exchange filing.
The company's Q1 FY25 consolidated revenue was recorded at ₹35,239 crore, up 6% YoY driven by favourable market prices. EBITDA for the said quarter increased by 47% to ₹10,275 crore vs ₹6,975 crore in the year-ago period, driven by structural cost-saving initiatives across businesses, easing of input commodity inflation, and favourable output commodity prices. EBITDA margin for the said stood at 34%, which showed an improvement of 1,000 bps.
"(The company recorded) strong double-digit return on capital employed c.25%, improved 181 bps QoQ and 763 bps YoY. Liquidity improved by 17% YoY with Strong Cash and Cash Equivalent of ₹16,692 crore," said Vedanta.
Vedanta raised ₹8,500 crore through one of the largest QIPs in the said quarter. The proceeds from the QIP will be further instrumental in deleveraging the balance sheet and reduction of finance cost.
CRISIL Ratings and India Ratings have maintained the ratings of Vedanta at CRISIL AA- and IND A+, respectively, in 1Q FY25, while continuing on “Watch” with developing implications.