Vedanta hits 52-week high on positive outlook

Anil Agarwal-led Vedanta hit a fresh 52-week high of ₹370 on the back of positive sentiment from analysts and market participants, ahead of their Q4 FY24 results.

Shares of the company closed with a gain of 7 per cent at ₹362 on Wednesday.

The bullish verdicts also continue to be driven by the company’s prioritization of deleveraging its balance sheet, planned capital expenditure and benefit arising from commodity upcycle.

Upgrading Vedanta from ‘underperform’ to ‘buy’ and increasing the target price to ₹390, CLSA in a report said the company is well-placed to benefit from the commodity upcycle given its diversified exposure.

In addition, its efforts to raise capacity and profitability across segments through its ongoing capex program should boost the group EBITDA to $6-7.5 billion from $5 billion.

Axis Securities report cited expansions in Aluminium and Zinc (both domestic and international) and the demerger exercise as levers for unlocking value.

These developments come as Vedanta gears up to report its Q4FY24 numbers. Research firm Nuvama in its Q4 earnings preview expects Vedanta to report an EBITDA uptick of 2 per cent Q-o-Q driven by higher volume in zinc, offset marginally by prices and lower cost of production in aluminium.

This comes at a time when the company’s stock has surged over 40 per cent adding $4.5 billion to its market capitalization since December. The stock has hit a succession of 52-week highs in April, closing up 33 per cent, in the last eight trading sessions.

The rally in stock price can be attributed to active buying in last four months by marquee investors such as BlackRock, Abu Dhabi Investment Authority besides domestic mutual funds such as ICICI MF, Nippon India MF and Mirae MF.

Vedanta recently expanded its alumina refinery capacity by 1.5 MTPA at Lanjigarh, Odisha. Similarly, Vedanta Sesa Goa commenced mining operations at the Bicholim Mineral Block- Block 1 in Goa.

The company is on track for the demerger of its key businesses, including aluminum, into separate listed companies and allocation of debt across the demerged entities.

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