Vedanta announced its December quarter results last week. Following the announcement, investors are concerned that Vedanta shares may decline again. Should investors consider buying the stock now? What are the key points to note? What do experts predict, and what has the brokerage firm stated? Let's explore.
Vedanta reported an 18% decline in net profit, amounting to 2013 crore, as expected, amid various forecasts. The decline was influenced by several factors, including higher interest rates, elevated capital goods prices, and a decrease in sales. In the year-ago period, the company had posted a net profit of Rs 2,464 crore. In the second quarter of the current fiscal, it had incurred a net loss of Rs 1,783 crore. Thus, the third-quarter growth is better when compared to the losses. Although profits have decreased, the Ebitda ratio has significantly improved from the previous quarter, reflecting a growth of 27%.
The parent company of Vedanta is expected to prioritize successful debt restructuring and subsequent expansion plans. A successful restructuring is anticipated to enhance the company's cash flow in the foreseeable future. Additionally, the company may declare a dividend to retain investors in the coming financial years, with an expected value of Rs 40 per share.
Meanwhile, Nuwama brokerage has recommended purchasing Vedanta shares and set a target price of Rs 371. According to a Nuama report, Vedanta aims to expand its aluminium and zinc portfolio by FY25, which can contribute to the company's growth. The Anil Agarwal-led company anticipates successfully segmenting the business into multiple segments by the first half of FY25 and divesting its steel-related assets. Overall, it plans to continue taking strategic steps for sustained growth.
Meanwhile, its promoters are expected to increase their stake from 13.6% to 50.1%. This move may enhance liquidity for the company. According to a report by brokerage firm Motilal Oswal Securities, Vedanta's operations witnessed significant growth in the December quarter, surpassing expectations in some segments. Additionally, the maturity period of the bonds has been extended, potentially providing additional liquidity to the company. This development may support the company in the short term.
Vedanta's asset sale plan has garnered interest from various quarters, and it is anticipated to be beneficial for further debt repayment. Increased sales can
Vedanta's stock saw a marginal rise to INR 265.50, with a 52-week high of INR 338.25 and a low of INR 208. Technically, the stock is trading above its 5-day, 10-day, 20-day, 50-day, 100-day, and 200-day moving averages. The primary breakout price is INR 263.68, and the current share price is above that level. While there is some pressure evident in daily and weekly candle patterns, strategic buying might be considered in the long run with proper guidance when the stock price experiences a decline.
Data in this section is not a buy/sell recommendation but only a compilation of information on various technical/volume-based parameters
Analyst certifies that all of the views, if any, expressed in this report reflect his personal views about the subject company or companies and its or their securities, and no part of his compensation was, is or will be, directly or indirectly related to specific recommendations or views expressed in this report. Analyst affirms that there exists no conflict of interest that can bias his views in this report. The Analyst does not hold any share(s) in the company/ies discussed.
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