Buy Vedanta, target price Rs 540: Emkay Global Financial Services

Emkay Global Financial Services has buy call on Vedanta with a target price of Rs 540. The current market price of Vedanta is Rs 335.35.

Vedanta, incorporated in the year 1965, is a Large Cap company (having a market cap of Rs 123745.56 Crore) operating in Diversified sector.

Vedanta key Products/Revenue Segments include Aluminium, Copper, Oil & Gas, Pig iron, Iron Ore, Others, Power, Metallurgical Coke, Export Incentives, Scrap, Other Operating Revenue, Other Sales for the year ending 31-Mar-2022.


Financials
For the quarter ended 31-12-2022, the company has reported a Consolidated Total Income of Rs 34818.00 Crore, down -6.78 % from last quarter Total Income of Rs 37351.00 Crore and up .42 % from last year same quarter Total Income of Rs 34674.00 Crore. Company has reported net profit after tax of Rs 3092.00 Crore in latest quarter.

The company’s top management includes Mr.Anil Agarwal, Mr.Navin Agarwal, Mr.Sunil Duggal, Ms.Priya Agarwal, Mr.Upendra Kumar Sinha, Mr.Akhilesh Joshi, Mr.Dindayal Jalan, Ms.Padmini Somani. Company has S R Batliboi & Co. LLP as its auditors. As on 31-12-2022, the company has a total of 372 Crore shares outstanding.

Investment Rationale
The brokerage forecast Vedanta to generate disposable free cash flow of Rs1,140 billion over FY23-25. On 12M-forward EBITDA (largely based on spot spreads), the stock is trading at EV/EBITDA of 4.2x, implying that even if metals prices were to suddenly correct to normalized levels, there is limited downside to the share price.

Promoter/FII Holdings
Promoters held 69.69 per cent stake in the company as of 31-Dec-2022, while FIIs owned 7.9 per cent, DIIs 11.04 per cent.