Caution prevails over loan to parent despite Vedanta's strong Q2 show

The concerns are outweighing the improved earnings outlook led by rebound in base metals prices

A stronger-than-expected July-September quarter (second quarter, or Q2) performance announced on Friday evening saw Vedanta’s stock gain 4.5 per cent to close at Rs 98.60 in Monday’s trade.

Despite these gains and an improvement in the operating environment, Vedanta's stock, which had corrected by over 30 per cent after the failed delisting attempt by promoters, has remained range-bound between Rs 92 and Rs 105.

The reason? The Street has become increasingly cautious about high promoter debt and Vedanta's inter-corporate lending. Despite being positive on Vedanta's near-term earnings outlook, analysts have lowered their target prices.

Inter-corporate deposits (ICDs given to parent Vedanta Resources) and