New Delhi: Mining group Vedanta Ltd is likely to face less cash flow pressure following liability management at the holding company level and is not well placed to deal with rising commodity prices, analysts say.
Better performance in aluminium, power and zinc enabled the company to achieve EBITDA of Rs 87,600 crore in the January-March quarter, up 4 per cent quarter-on-quarter. The improvement in performance was due to lower production costs and higher sales volumes in aluminum and zinc, partially offset by softer zinc prices.
Despite minor delays, Vedanta is set to complete its Alumina/Aluminium International Zinc expansion during the current financial year (FY25), which will provide visibility regarding volume growth and cost reduction after FY26. With the commencement of coal mines in FY 2026, its aluminum production cost will further reduce.In a post-earnings note, Nuwama Institutional Equities said the management is moving to demerge the businesses by the end of the current fiscal year (April 2024 to March 2025). Splitting its businesses into six listed entities could yield higher returns for Vedanta than its current valuation.
“We believe Vedanta is best positioned to weather rising commodity prices. Rising commodity prices not only improve cash flows but also open up the possibility of upside in valuation multiples, as debt The burden will be reduced to a great extent."
Citi said liability management in the holding company also provides confidence to Vedanta India's balance sheet."Reduced pressure on cash flows, commodity price resilience, possible sale of steel/iron ore businesses - management expects this over the course of two quarters, possible restructuring - NOCs are awaited from lenders for filing in NCLT While Vedanta expects the process to be completed by calendar year 2024, our dividend yield estimate will exceed 10 per cent - we reiterate Boo (on company shares),'' it said.
Philip Capital said that as Vedanta has successfully resolved its debt issue, commodity prices have also bounced back, further supporting cash flows.
“We continue our positive outlook as we think there is scope for commodity prices to improve on the back of Chinese stimulus and demand improvement in 2H. The separation of the businesses and the potential sale of any assets will allow management to service its debt. will gain help in.Obligations. We have grown our FY2 EBITDA by 17 per cent."
Antique Stock Broking Ltd said strength in commodity prices (supported by supply constraints and steady demand) will support topline growth, while accumulation of benefits of cost optimization initiatives, with most coming after FY25, will support profitability.
"We like the company's low-cost producer advantage," it said. “We take into account per cent higher aluminium, 9 per cent higher zinc prices, which drives our FY25 26 EBITDA by 11 per cent/15 per cent (respectively).,
Centrum said that for the current quarter, it expects a sharp rise in commodity prices to drive strong growth in the zinc and aluminum segments, leading to an increase in overall earnings.
"Vedanta is poised to level up across all businesses through capacity expansion, cost savings through backward integration that will improve margins and enhance earnings," it said. “We expect Zinc India and Aluminum to grow at 18 per cent and 30 per cent CAGR in FY 2024-26.”
It said despite a hefty dividend payout of Rs 45 per share and capital expenditure of around US$ 2 billion in FY20F and FY26, strong earnings visibility led to reduction of net debt position to US$ 1. billion. This is expected to help generate strong free cash flow for the company.
CLSA said Vedanta aims to boost group Ebitda to US$6 billion by FY2025/27 through capacity expansion, backward integration and value addition projects. Is guided to increase to US$ billion.Reported net debt declined by Rs 6,000 crore quarter-on-quarter to Rs 56,300 crore due to a sharp drawdown in working capital (inventories/receivables), which is likely to be sustainable.
"Vedanta reiterated its guidance to reduce debt at parent Vedanta Resources VRL by US$3 billion over the next three years. Accelerating ongoing projects will lead to project capex of US$1.9 billion in FY25 (FY24 1.4 billion US dollar)." He said, this is not expected to increase the debt of the company.
Better performance in aluminium, power and zinc enabled the company to achieve EBITDA of Rs 87,600 crore in the January-March quarter, up 4 per cent quarter-on-quarter. The improvement in performance was due to lower production costs and higher sales volumes in aluminum and zinc, partially offset by softer zinc prices.
Despite minor delays, Vedanta is set to complete its Alumina/Aluminium International Zinc expansion during the current financial year (FY25), which will provide visibility regarding volume growth and cost reduction after FY26. With the commencement of coal mines in FY 2026, its aluminum production cost will further reduce.In a post-earnings note, Nuwama Institutional Equities said the management is moving to demerge the businesses by the end of the current fiscal year (April 2024 to March 2025). Splitting its businesses into six listed entities could yield higher returns for Vedanta than its current valuation.
“We believe Vedanta is best positioned to weather rising commodity prices. Rising commodity prices not only improve cash flows but also open up the possibility of upside in valuation multiples, as debt The burden will be reduced to a great extent."
Citi said liability management in the holding company also provides confidence to Vedanta India's balance sheet."Reduced pressure on cash flows, commodity price resilience, possible sale of steel/iron ore businesses - management expects this over the course of two quarters, possible restructuring - NOCs are awaited from lenders for filing in NCLT While Vedanta expects the process to be completed by calendar year 2024, our dividend yield estimate will exceed 10 per cent - we reiterate Boo (on company shares),'' it said.
Philip Capital said that as Vedanta has successfully resolved its debt issue, commodity prices have also bounced back, further supporting cash flows.
“We continue our positive outlook as we think there is scope for commodity prices to improve on the back of Chinese stimulus and demand improvement in 2H. The separation of the businesses and the potential sale of any assets will allow management to service its debt. will gain help in.Obligations. We have grown our FY2 EBITDA by 17 per cent."
Antique Stock Broking Ltd said strength in commodity prices (supported by supply constraints and steady demand) will support topline growth, while accumulation of benefits of cost optimization initiatives, with most coming after FY25, will support profitability.
"We like the company's low-cost producer advantage," it said. “We take into account per cent higher aluminium, 9 per cent higher zinc prices, which drives our FY25 26 EBITDA by 11 per cent/15 per cent (respectively).,
Centrum said that for the current quarter, it expects a sharp rise in commodity prices to drive strong growth in the zinc and aluminum segments, leading to an increase in overall earnings.
"Vedanta is poised to level up across all businesses through capacity expansion, cost savings through backward integration that will improve margins and enhance earnings," it said. “We expect Zinc India and Aluminum to grow at 18 per cent and 30 per cent CAGR in FY 2024-26.”
It said despite a hefty dividend payout of Rs 45 per share and capital expenditure of around US$ 2 billion in FY20F and FY26, strong earnings visibility led to reduction of net debt position to US$ 1. billion. This is expected to help generate strong free cash flow for the company.
CLSA said Vedanta aims to boost group Ebitda to US$6 billion by FY2025/27 through capacity expansion, backward integration and value addition projects. Is guided to increase to US$ billion.Reported net debt declined by Rs 6,000 crore quarter-on-quarter to Rs 56,300 crore due to a sharp drawdown in working capital (inventories/receivables), which is likely to be sustainable.
"Vedanta reiterated its guidance to reduce debt at parent Vedanta Resources VRL by US$3 billion over the next three years. Accelerating ongoing projects will lead to project capex of US$1.9 billion in FY25 (FY24 1.4 billion US dollar)." He said, this is not expected to increase the debt of the company.
