Vedanta shares fall 3% on weak Q1 results. Should you buy or sell?

Shares of Anil Agarwal-led agency Vedanta fell 3% to Rs 271 in Monday’s commerce on BSE after the corporate reported a consolidated web revenue of Rs 2,640 crore for the quarter ended June, down about 40% from Rs 4,421 crore reported in the identical quarter final 12 months.

Its income from operations fell 13% to Rs 33,342 crore for the primary quarter as towards Rs 38,251 crore. The autumn in income was primarily because of a steep discount in output commodity costs, partially offset by beneficial motion within the change fee.

The corporate reported an EBITDA of Rs 6,975 crore for the April-June interval, down 35% from Rs 10,741 crore in the identical interval of final 12 months, because of decrease output commodity costs and decrease gross sales.

EBITDA margin for the quarter stood at 24%. Monetary prices jumped almost 74% to Rs 2,110 crore through the June quarter on account of a rise within the blended price of borrowings and common borrowings.

At 10.06 am, the scrip was buying and selling 2.5% decrease at Rs 271.4 on BSE. On a year-to-date foundation, the inventory has declined almost 14%.

This is what brokerages say:Kotak Institutional EquitiesFollowing the This fall outcomes, Kotak Institutional Equities maintained its ‘Promote’ score on Vedanta with a goal worth of Rs 215 (Rs 235 earlier).”Vedanta 1QFY24 EBITDA got here 10% beneath our estimate, led by decrease margins in oil & fuel and ferrous companies. We count on the continued weak point in commodity cycle to persist within the medium time period and end in subdued earnings,” the brokerage agency stated.”Detrimental FCF over FY2024-25E and rising debt recommend that top dividends are not sustainable. Substantial repayments at father or mother VRL over FY2024-25E stay a key overhang, in our view,” it added.

InvestecInvestec maintained a ‘Promote’ score on Vedanta with a goal worth of Rs 180. Q1 EBITDA numbers have been beneath estimates and the debt continues to swell.

The brokerage agency sees dangers of Vedanta’s money stream mismatch, forcing the corporate to divest property. The corporate’s foray into semiconductors is stunning contemplating its present money stream profile.

NuvamaBrokerage agency Nuvama downgraded Vedanta to ‘Cut back’ from ‘Purchase’ score with a goal worth of Rs 249 (Rs 367 earlier).

“We reduce FY24E/FY25E EBITDA by 18%/10% to think about decrease commodity costs. With decrease money era, VEDL has to take exterior debt to finance its father or mother’s debt through dividends. With rising debt, we imagine risk-reward will not be beneficial,” Nuvama stated.

“We do recognize administration’s dedication to repay VRL’s debt, but it surely impacts VEDL’s minority shareholders adversely,” it stated.

(Disclaimer: Suggestions, recommendations, views, and opinions given by the consultants are their very own. These don’t signify the views of Financial Occasions)