I-Sec maintains Buy on Vedanta, lowers target price to Rs 575
ICICI Securities maintains a Buy call on Vedanta, revising the target price to Rs 575. Q4FY25 EBITDA rose 31% YoY, driven by higher volumes and cost savings. The brokerage anticipates 18.6% YoY EBITDA growth in FY26E, fueled by cost initiatives, i...
Agencies
ICICI Securities has maintained a Buy call on Vedanta with a revised target price of Rs 575 (Rs 605 earlier). The current market price of Vedanta Ltd. is Rs 417.
Financials
Vedanta's Q4FY25 performance was slightly ahead of our estimates, though missed consensus estimates. Key points: 1) Consolidated EBITDA at Rs 114.6 billion (up 31% YoY, 3.3% QoQ) on the back of higher volumes and structural cost-saving initiatives across key divisions; 2) CoP/t of Zn-India at $994/te was at 16-quarter low; 3) Al EBITDA/t at USD 883/te (up 48% YoY) was aided by higher VAP proportion and higher LME Al prices, offsetting the impact of higher cost of alumina; 4) Zn-International EBITDA gained from sustained lower cost at Gamsberg; and 5) net debt/EBITDA at 1.2x (Q3FY25: 1.4x). Going ahead, ICICI Securities expects the performance to be driven by volume ramp up and continuous cost initiatives at key divisions.
Investment Rationale
Despite subdued commodity prices, ICICI Securities expects Vedanta's EBITDA to grow at 18.6% YoY in FY26E mainly driven by structural cost initiatives at Al division, higher volume at key divisions and improved performance of oil & gas and power divisions. Standalone debt at holdco level is down at (decadal low) USD 4.9bn with debt maturity (including interest) of $ 1.4-1.5 billion likely to be met through a combination of royalty from Vedanta Limited and dividend (assuming a yield of 6%). Taking cognisance of prevailing commodity prices, the brokerage has lowered LME price estimates by 10%. However, a combination of higher-than-expected volume and lower cost has led to EBITDA decline of 5%/2% for FY26/27E. The revised target price works out to Rs 575 (earlier Rs 605). I-Sec maintains a BUY.
Promoter/FII Holdings
Promoters held 56.38 per cent stake in the company as of 31-Mar-2025, while FIIs owned 11.14 per cent, DIIs 16.25 per cent.
Financials
Vedanta's Q4FY25 performance was slightly ahead of our estimates, though missed consensus estimates. Key points: 1) Consolidated EBITDA at Rs 114.6 billion (up 31% YoY, 3.3% QoQ) on the back of higher volumes and structural cost-saving initiatives across key divisions; 2) CoP/t of Zn-India at $994/te was at 16-quarter low; 3) Al EBITDA/t at USD 883/te (up 48% YoY) was aided by higher VAP proportion and higher LME Al prices, offsetting the impact of higher cost of alumina; 4) Zn-International EBITDA gained from sustained lower cost at Gamsberg; and 5) net debt/EBITDA at 1.2x (Q3FY25: 1.4x). Going ahead, ICICI Securities expects the performance to be driven by volume ramp up and continuous cost initiatives at key divisions.
Investment Rationale
Despite subdued commodity prices, ICICI Securities expects Vedanta's EBITDA to grow at 18.6% YoY in FY26E mainly driven by structural cost initiatives at Al division, higher volume at key divisions and improved performance of oil & gas and power divisions. Standalone debt at holdco level is down at (decadal low) USD 4.9bn with debt maturity (including interest) of $ 1.4-1.5 billion likely to be met through a combination of royalty from Vedanta Limited and dividend (assuming a yield of 6%). Taking cognisance of prevailing commodity prices, the brokerage has lowered LME price estimates by 10%. However, a combination of higher-than-expected volume and lower cost has led to EBITDA decline of 5%/2% for FY26/27E. The revised target price works out to Rs 575 (earlier Rs 605). I-Sec maintains a BUY.
Promoter/FII Holdings
Promoters held 56.38 per cent stake in the company as of 31-Mar-2025, while FIIs owned 11.14 per cent, DIIs 16.25 per cent.
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