MOSL: VEDANTA (Sell)-Lower CoP in aluminum and zinc-int drives beat; Capital allocation concerns remain
VEDANTA: Lower CoP in aluminum and zinc-int drives beat; Capital allocation concerns remain; Maintain Sell
(VEDL IN, Mkt Cap USD8.7b, CMP INR163, TP INR144, 12% Downside, Sell)
- VEDL's 4QFY19 EBITDA grew 9% QoQ to INR61.3b (our estimate: INR54.3b). Lower cost of production (CoP) in aluminum and zinc international was the key driver of its growth and better-than-estimated performance. Other income increased 16% QoQ (+64% YoY) to INR16.3b (our estimate: INR2.9b), led by a mark-to-market gain on the structured investment in Anglo American. Adj. PAT grew 15% QoQ to INR26.1b (our estimate: INR6.7b).
- Reported aluminum CoP was down USD249/t QoQ to USD1,776/t due to lower alumina and coal cost. Reported EBITDA/t increased by USD74 QoQ to USD131.
- Zinc-int CoP was down USD269/t QoQ to USD2,540/t owing to higher volumes (+42% QoQ). Gamsberg started commercial production during the quarter.
- Iron ore EBITDA doubled QoQ to INR2.4b, led by higher volumes in Karnataka. Electrosteel's EBITDA increased 35% QoQ to INR3.4b, driven by a 35% QoQ increase in sales volume. EBITDA/t was flat QoQ at INR8,597/t.
- For FY19, EBITDA was down by 8% YoY, while adj. PAT declined ~11% YoY.
Vedanta is diversified natural resources company. Co.'s business is principally located in India. Co. maintains operations in Australia, United Arab Emirates, South Africa, Namibia and Ireland. Co. is primarily engaged in zinc, oil and gas, iron ore, copper, aluminium and commercial power generation businesses and is also developing and operating port operation businesses and infrastructure assets. Co.'s operations are organized along four business divisions: Zinc (fully-integrated zinc business operated by HZL); Oil & Gas (domestic oil production through Cairn India); Iron Ore; Copper (custom smelting); Aluminum (Balco); and Power (multiple power plants across locations in India).
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.