Vedanta share price target at Rs 390: CLSA ups rating on stock to 'Buy', says this

Foreign brokerage CLSA has upgraded Vedanta shares to 'Buy' from 'Underperform' with a revised price target of Rs 390 from Rs 260 earlier. The fresh target suggests a 15 per cent potential upside over Vedanta’s Tuesday’s closing price of Rs 338.20. The Anil Agarwal-led Vedanta Ltd is well-placed to benefit from commodity upcycle given its diversified exposure, CNBC TV18 quoting CLSA suggested. Efforts to increase capacity and profitability across segments auger well, CNBC TV18 reported CLSA as saying.

Vedanta has guided for group Ebitda to rise to $6 billion by FY26 and $7.5 billion by FY27 from $5 billion. While the parent Vedanta Resources has cut debt substantially, leverage at the company has increased. CLSA believes that Vedanta's leverage trajectory and corporate structure will be key to watch.

In its March quarter preview note, PhillipCapital said Vedanta may report a sequential decline in volumes in Aluminium, Copper and Zinc International segments. Iron ore volumes remains flat QoQ, it said.

This brokerage expects Vedanta to report a 19.1 per cent YoY fall in profit at Rs 2,533 crore on 9.3 per cent drop in sales at Rs 34,411 crore.

"Vedanta is expected to report an Ebitda uptick of 2 per cent QoQ driven by higher volume in zinc, offset marginally by prices and lower CoP in aluminium. Aluminium is expected to report an Ebitda uptick of 2.5 per cent QoQ . Zinc international is expected to report a normal EBITDA (2x QoQ due to low base)," said Nuvama Institutional Equities.

Vedanta shares are up 31.49 per cent in 2024 so far. They are up 25 per cent for the one-year-period. This is even as the average target price on Vedanta stands at Rs 292, as per Trendlyne, suggesting a 14 per cent potential downside ahead.