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Shares of Vedanta hit a 23-month high of Rs 364.65 as they surged 8 per cent on the BSE in Wednesday's intraday trade amid heavy volumes, on report that CLSA has upgraded the company's rating to 'buy', raising the target price to Rs 390 with an eye on the rise in commodity prices.
The company is favourably positioned to capitalise on the commodity upcycle, thanks to its diversified exposure. Moreover, its ongoing efforts to enhance capacity and profitability across various segments bode well for future prospects, as per reports.
The stock of the diversified metal company hit its highest level since May 2022. In the past four weeks, the market price of Vedanta has appreciated 45 per cent. At 10:04 am, it was trading 7 per cent higher at Rs 362, as compared to 0.21 per cent rise in the S&P BSE Sensex. Average trading volumes on the counter more-than-doubled today with a combined 33.58 million equity shares changing hands on the NSE and BSE.
In the past one week, the stock has rallied 22 per cent after the company said it delivered the highest-ever annual volume across key businesses.
Vedanta's consolidated operating profitability (earnings before interest, tax, depreciation and amortisation [Ebitda]) for FY24 is expected to be around Rs 34,500 crore (~Rs 35,250 crore in fiscal 2023). This will be supported by reduced cost pressure and healthy operating rates across key business segments, along with recent gains from the arbitration award in the oil and gas business, despite commodity prices remaining modest and slower-than-expected progress on the planned capital expenditure (capex) in the aluminium business.
Vedanta’s consolidated operating profitability in FY24 is expected to be above Rs 35,000 crore. This is on account of the expected increase in backward integration and volume in the aluminium business after commissioning of ongoing capex, robust operating rates across key businesses, and continued efficiency gains. Timely completion of the ongoing capex and ramp-up of new capacities and the consequent improvement in operating profitability will be a key monitorable, CRISIL Ratings said in its rationale.
Meanwhile, the world's largest asset manager BlackRock, as well as the Abu Dhabi Investment Authority, along with domestic mutual funds like ICICI Mutual Fund and Nippon India Mutual Fund have increased their holdings in Vedanta by almost 2 per cent during the last four months, PTI reported.
