MOSL: VEDANTA (Neutral)-Slight miss led by Aluminum and Steel; Cutting estimates for Aluminum business
VEDANTA: Slight miss led by Aluminum and Steel; Cutting estimates for Aluminum business
(VEDL IN, Mkt Cap USD7.4b, CMP INR144, TP INR150, 4% Upside, Neutral)
- Vedanta's (VEDL) EBITDA of INR44b (-15% QoQ) was below our estimate of INR47.2b (6% miss) due to higher cost of production (CoP) in the aluminum business and lower margins in the steel business. Other income increased to INR8.6b from INR3.8b in the previous quarter, led by mark-to-market gain on its investments. PBT declined 26% QoQ to INR15.4b (11% miss). However, adj. PAT was up at INR25.2b (1Q: INR9.3b) due to deferred tax credit of INR25b.
- Aluminum business reported a loss of INR1.1b at the EBITDA level (v/s profit of INR1.8b in 1Q) due to lower LME and higher CoP (up USD88 QoQ led by higher power cost due to lower linkage coal availability).
- Zinc-international EBITDA increased 62% QoQ to INR2.1b, led by lower CoP and higher sales, partly offset by lower realizations. Steel EBITDA stood at INR0.2b (1Q: INR2b) on lower steel prices. Copper continued dragging as operations remained shut. Oil & Gas (EBITDA: INR18b) performed on expected lines. Hindustan Zinc had reported an EBITDA of ~INR21b.
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.
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