Q1 Results: Analysts Cheer Vedanta’s Plans To Exit Anglo American
Brokerages maintain their stance on Vedanta despite the copper plant shutdown and weak commodity prices hurting its Q1 results.
Analysts retained their target price estimates for Vedanta Ltd. as the billionaire Anil Agarwal-led company plans to exit its stake in Anglo American Plc—an investment that had sparked corporate governance concerns.
Also, Vedanta said it will neither have any further economic exposure in the South African miner’s shares nor does it intend to enter into similar related-party transactions in the future. That allayed investors’ fears.
Vedanta’s net profit fell 11.9 percent over last year to Rs 1,351 crore in the April-June period. Its operating profit fell 16 percent to Rs 5,198 crore and operating margin narrowed 360 basis points to 24.3 percent.
Here’s what brokerages have to say about Vedanta Q1 Results 2019-20:
- Maintains ‘Buy’; target price unchanged at Rs 205.
- Subdued performance of aluminium and zinc international business led to a miss.
- Robust volume growth—the only silver lining.
- Net debt jumped quarter-on-quarter due to higher working capital.
- Comparatively lower debt levels and expectation of dividend yield of 5-6 percent remains positive.
- Maintains ‘Hold’; target price unchanged at Rs 175.
- Slower-than-expected ramp up of oil and gas division led to the miss.
- Continued decline in oil and gas production remains a concern.
- Ramp-up at key divisions oil and gas, zinc India and zinc international to be key value drivers.
- Maintaining FY20 production guidance also a positive despite slowdown in oil & gas division.
- Capital allocation concerns have been allayed; balance sheet has sufficient strength.
- Maintains ‘Add’; target price unchanged at Rs 184.
- Operational performance in line with estimates.
- Decline in Ebitda due to lower LME prices and higher input costs.
- Losses on account of closure of Tuticorin plant partly offset by stronger U.S. dollar.
- Lowers FY20/21 earnings per share estimate to Rs 15/15 from Rs 18/16.
- EPS target reduced to factor in rupee depreciation.
- Closure of structured investment in Anglo American removes overhang on the stock.