Vedanta shares slip 27% from 52-week high; can they still cross Rs 400 mark?

Shares of mining major Vedanta are trading 27% lower from their 52-week high. The mining stock has lost Rs 118 or 26.81% from the yearly high of Rs 440.75 hit on April 11, 2022. In the current trading session, Vedanta stock was trading 1.48% higher at Rs 322.20 against the previous close of Rs 317.50 on BSE. Vedanta shares have lost 0.05 per cent in a year and gained 4.54 per cent since the beginning of this year. Total 2.22 lakh shares of the firm changed hands amounting to a turnover of Rs 7.15 crore on BSE. Market cap of the firm rose to Rs 1.19 lakh crore.  

In the previous session, Vedanta stock ended at Rs 317.60, up 0.16% on BSE. On the other hand, Vedanta stock has gained 54% from its 52-week low in over 6 months. Vedanta stock has zoomed from the yearly low of Rs 206.10 to Rs 322 in the current trading session.

The share hit a 52-week low of Rs 206.10 on July 1, 2022.

In terms of technicals, the relative strength index (RSI) of Vedanta stands at 55.9, signaling neither the stock is overbought nor oversold. The stock has a one-year beta of 1.3, indicating high volatility during the period.  The PE ratio of stands at 7.21 signaling the stock is undervalued compared to its industry. The PE of the mining industry major stands at 9.94. Vedanta stock is trading higher than 5-day, 20-day, 50-day, 100-day and 200-day moving averages.

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Earnings in the second quarter of the current fiscal came below expectations. The mining conglomerate reported a 60.8 per cent fall in consolidated net profit at Rs 1,808 crore in Q2 on the back of higher expenses. The company had posted a consolidated net profit of Rs 4,615 crore in the year-ago period. Profit dropped after expenses during the July-September period rose to Rs 33,221 crore from Rs 23, 171 crore in the year-ago period. Consolidated income during the quarter under review rose to Rs 37,351 crore from Rs 31,074 crore last year.

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In the third quarter, Nuvama Institutional Equities expects Vedanta to report a revenue of Rs 31,259.8 crore, down 14.7 per cent QoQ and 8.3 per cent YoY, with EBITDA at Rs 6,282.6 crore, down 12.5 per cent QoQ and 41.5 per cent YoY. The brokerage sees adjusted PAT at Rs 1,121.8 crore, down 73.3 per cent QoQ, Nuvama said. Except for aluminium and power, all other segments are expected to report a decline in EBITDA QoQ, it said.

"The aluminium Ebitda is likely to increase by 35 per cent QoQ, whereas Zinc International's earnings are expected to be suppressed due to lower zinc prices, higher margins. Power EBITDA is expected to increase by 32 per cent," Nuvama said.

Phillip Capital expects Vedanta to report a revenue of Rs 34,371.5 crore, dropping 6.2 per cent QoQ (flat YoY). EBITDA is seen at Rs 6,393.80 crore, down 17 per cent QoQ and 40.5 per cent YoY. Adjusted profit after tax (PAT) is likely to come at Rs 1,085.8 crore, down 31 per cent sequentially.

Here's a look at what analysts said on the prospects of the Vedanta stock.  

Laxmikant Shukla, Technical Research Analyst, YES Securities said , "After correcting from the high of Rs 440 in April 2022, Vedanta has found support around Rs 205 where 200-monthly moving average lies. The stock has rebounded and started making higher bottoms over the last few months. Weekly RSI is in rising mode and weekly stochastic has given bullish crossover on the charts. Beside this, stock is also forming ascending triangle pattern on the weekly chart. Technical set up is looking lucrative for the upside potential of Rs 360-370 zone. Hence, one can initiate long position at current levels of Rs 315-320 with stop loss of Rs 295 on closing basis."

Ravi Singhal, CEO at GCL said, "Commodity prices have bounce backed from 2022 lows. Copper has gained almost 20% in the last 6 months and unlocking of China is also helping price support. The stock looks technically good for target of Rs 388 with a stop loss of Rs 297."  

Abhijeet from Tips2trade said, "An expected nod to set up a semi-conductor chip plant in partnership with Foxconn has led to a decent uptrend in Vedanta stock price. Vedanta has very strong resistance at Rs 325. A daily & weekly close above Rs 325 should lead to Rs 358-409 in the coming weeks. Strong support will be at  Rs 307. "

Osho Krishan, senior Analyst - Technical & Derivative Research, Angel One said, "Vedanta is gradually surging upwards post the July month lows of Rs 180 odd zone. Currently, the stock is hovering well above its major exponential moving averages on the daily chart, indicating inherent strength in the counter. Simultaneously from the last couple of trading sessions, the stock is gaining traction and is likely to break through from the ongoing consolidation. As far as levels are concerned, Rs 310 is expected to provide a cushion from any blip, while the sacrosanct support lies around the bullish gap of the Rs 300 zone. On the higher end, the stock looks promising to reclaim its 52-week high in the comparable period." 

Nagaraj Shetti, Technical Analyst, HDFC Securities said, "The long-term charts like monthly indicates wild price movements that witnessed in VEDL (Vedanta) over the last many years. The stock price showed a substantial upside rallies post sharp down trend in the past. The formation of crucial bottom reversal post selling climax of May and June 22 is also signaling an important turnaround for the stock price on the upside. We expect the current uptrend to continue and the next overhead resistance to be watched around Rs 360 and next Rs 410 over the next 3-4 months."

Vedanta Limited is an India-based diversified natural resources company. The company produces aluminum, copper, zinc, lead, silver, iron ore, oil and gas, and commercial energy. It operates through five reportable segments: oil and gas, aluminum, copper, iron ore, and power. Its aluminium business includes a refinery and captive power plant at Lanjigarh and a smelter and captive power plants at Jharsuguda, both situated in Odisha.