Nikita.Periwal@timesgroup.com
STOCK AT HIGHEST IN TWO YEARS after massive underperformance; analysts advise a buy for 9-12 month horizon as charts look bullish
Mumbai: Shares of Vedanta have seen their sharpest monthly gains in a decade so far in April, with a rally in base metal prices and its underperformance over the last few years triggering a technical breakout. The stock is up nearly 44% so far in April, outperforming other local metal producers. The Nifty Metal index has risen 7.5% in the same period. Even though some profit-taking is expected in the near term, the current patterns show that the stock is likely to notch up further gains over the next 6-12 months, with technical analysts seeing arise to ₹460-480 levels.
On Thursday, the stock ended at ₹388.50 on the NSE, up nearly 3% from the previous close. The shares have ended in the green in 10 out of 12 trading sessions this month and are currently at their highest level in nearly two years. “The stock has not moved much in the last three years, and this massive underperformance is also leading to the current sharp gains in the shares,” said Sudeep Shah, head of technical and derivatives research at SBICAP Securities. The shares can be accumulated in the range of 2350-380 for a target of 2470-480 over a 9-12 month period, he said. Shah advises main
training's top loss of 2330. Between April 2021 and March 2024, Vedanta has — risen by around The outlook 19%, under peron the stock forming the Nifty has turned Metal index, positive as which more than concerns doubled in the of debt same period. overhang Institutional owhaveabated ~ nership also saw a for now dip during this period, with foreign portfolio investors cutting their stakes in the company to 8.78% as of March 2024, nearly half of 16.27% in March 2021.
Mutual funds also trimmed their stake t03.55% from 3.94% in the same period. Concerns of massive debt at parent Vedanta Resources, and Vedanta making hefty dividend payouts to support its parent have been among the key reasons weighing on the stock.
Analysts have, however; turned positive on the stock for now with concerns of debt obligations at bay for
the time being, Vedanta completing
capacity expansions for several of
its verticals, and managing to bring
down production costs for its key
aluminium and zinc businesses.
CLSA recently upgraded the stock
to ‘buy’ from ‘underperform’ earlier, raising the target price for its
shares by 50% to Z390. The company’s management has also guided
for debt at the parent entity being
cut by $3 billion, and ramping up
operating profitsata group level.
“FY25 should be the transformational year for Vedanta with debt
likely peaking out, expansion of
aluminium and zinc international slated for completion and value unlocking happening on the
back of demerger and listing of all
business verticals,” Nuvama Institutional Equities said in a recent note, rating the stock a ‘buy” fora target price of 394.
“Vedanta has seen a breakout
above 2290 levels, and could test
%415 in the near term,” said Shiju
Koothupalakkal, technical analyst at Prabha's Lilla her. He
sees the shares rising to 460 in
six months, and near-term supportatz360.
Vedanta Shares Break
Out of Past Lag
Shares of Vedanta have seen their sharpest monthly gains in a decade so farin April, with rally in base metal prices and its underperformance over the last few years triggering technical breakout.
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