Vedanta shares crash 8% post Q3 earnings but brokerages are bullish; here's why

Shares of metal major Vedanta Ltd crashed over 8% on Friday after the firm reported its Q3 earnings. Vedanta stock fell 8.31% to Rs 702.40 in the current session against the previous close of Rs 766.10. Market cap of the firm slipped to Rs 2.77 lakh crore. A total of 14.51 lakh shares of the firm changed hands amounting to a turnover of Rs 104.55 crore. 

The metal major's shares are trading higher than the 5 day, 10 day, 20 day, 30 day, 50 day, 100 day, 150 day and 200 day moving averages. 

Vedanta stock is trading in the overbought zone with its RSI rising to 88.1. The stock has risen 168% in two years and gained 342.55% in five years. 

The mining conglomerate reported a 60% rise in Q3 net profit at Rs 7,807 crore compared to Rs 4,876 crore in the corresponding quarter of the previous fiscal. Revenue from operations rose 19 per cent to Rs 45,899 crore in Q3 FY25 against Rs 16,742 crore in the year-ago period.

Brokerage Systematix maintains its buy stance on the stock with a price  target of Rs Rs 898/share.

"The company generated strong free cash flows to the tune of Rs 1870 crore this quarter versus Rs 1680 crore generated in 2QFY26; cash balance at the end of 3Q stands at Rs 20080 crore. We maintain BUY rating on the stock based on SoTP FY28E EV/EBITDA with a revised target price of Rs 898/share," said the brokerage. 

Motilal Oswal has a  neutral call on the stock with a price target of Rs 810. 

The brokerage believes that capex plans were progressing well and will likely lead to further cost savings.

"The management is eyeing strong growth targets in earnings, led by the
upcoming capacity, which will produce higher VAP products. Vedanta remains firm on its deleveraging plans, and going forward, higher cash flows will support both its expansion plans and deleveraging efforts," said the brokerage. 

"The stock currently trades at 7x EV/EBITDA and 4.4x P/BV on the FY27
estimate. We reiterate our Neutral rating on the stock with a SoTP-based TP of Rs 810" added Motilal Oswal. 

Nuvama has assigned a fair value of Rs 1,274 on the metals and mining stock. 

"We are raising FY27E/28E EBITDA by 4% to factor in higher aluminium prices (FY27/28 LME aluminium of USD 3,100/2,850 versus USD 3,000/2,750 earlier). We are factoring in EBITDA CAGR of 21% over FY25–28E. On MTM basis (LME aluminium @USD3,200, zinc @USD3,400, silver @USD110 and USD/INR of 92), FY28E EBITDA is likely to be Rs 1,04900 crore," said Nuvama.