Vedanta shares under pressure after metal major's operationally weak Q1 performance

Vedanta shares faced selling pressure on Monday after the mining major reported an operationally weak set of quarterly numbers, as weak commodity prices outweighed a slight increase in production and sales for metals like aluminium. The stock of Vedanta — traded on the bourses with the symbol VEDL — fell by as much as Rs 7.9 or 2.8 per cent to Rs 270.5 apiece on BSE, coming within Rs 35 of a 52-week low hit in January. 

Vedanta Q1 results: A summary

After market hours on Friday, Vedanta reported a 40.3 per cent year-on-year drop in net profit to Rs 2,640 crore for the April-June period. Its revenue contracted 12.7 per cent to Rs 33,733 crore compared with the corresponding period a year ago, according to a regulatory filing. 

The company reported Rs 6,420 crore in earnings before interest, taxes, depreciation and ammortisation (EBITDA) for the June quarter, as against Rs 10,197 crore for the year-ago period. 

Its margin — a key measure of profitability — shrank by 740 basis points on a year-on-year basis to 19 per cent. 

According to Zee Business research, Vedanta's quarterly net profit was estimated at Rs 1,603 crore, revenue at Rs 32,264 crore, EBITDA at Rs 7,128 crore and margin at 22 per cent. 

Vedanta said total sales as well as production of aluminium rose two per cent.

What brokerages make of Vedanta's Q1 earnings 

Citi double-downgraded Vedanta to 'sell' from 'neutral' after the company's earnings announcement and reduced its target price for the metal major's stock by Rs 15 or 6.3 per cent to Rs 225, suggesting a downside of 19 per cent from Friday's closing price.   

According to the brokerage, Vedanta's EBITDA fell 30 per cent sequentially on account of lower commodity prices and volumes. 

CLSA maintained a 'reduce' rating on Vedanta and raised its target price for the metal stock to Rs 225. 

(With inputs from agencies)

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