Vedanta gains over 1% ahead of Q4 results; here's what brokerages expect

While Nifty50 has gained 8.23 per cent between May 7, 2018 and May 6, 2019, Vedanta has slipped 41.5 per cent. Nifty metal index has also fallen by 18.32 per cent over the same period.

Shares of Vedanta rallied over 1 per cent in the intra-day trade on Tuesday to Rs 170.5 apiece on the National Stock Exchange (NSE). The metals and mining major is due to declare its Q4 numbers for fiscal year 2018-19 later in the day.

At 11.05 am, the stock was trading 1.2 per cent higher at Rs 169 while the Nifty metal index was up 1.09 per cent. On the other hand, the benchmark Nifty50 index was trading 0.02 per cent lower at 11,596 levels. A total of 52,03,257 shares changed hands on NSE at the time of writing this report.

Q4 PREVIEW: WHAT ANALYSTS EXPECT
 

Analysts expect the metal sector to have flattish results on both, sequential and YoY (year-on-year) basis. They expect the EBITDA (earnings before interest, tax, depreciation and amortization) margin to decline by 180 basis points (bps) sequentially and 420 bps YoY. 
 

According to analysts at ICICI Securities, Vedanta’s net profit is expected to fall by as much as 77 per cent YoY to Rs 1,106.4 crore. This would be a fall of nearly 30 per cent on sequential basis.
 

“The decline in prices of major base metals is likely to weigh on Vedanta's Q4FY19 performance,” they wrote in an earnings preview note. 
 

Analysts at Motilal Oswal, too, expect the EBITDA to decrease by 2 per cent q-o-q to Rs 5,550 crore due to lower zinc volumes and the exchange rate impact. 
 

“Adjusted PAT is estimated to decrease by 51 per cent q-o-q to Rs 770 crore. EBITDA for aluminium is expected to come in at Rs 90 crore, on lower LME,” they said.
 

Despite subdued expectations, the rally in Vedanta’s stock could be attributed to an overall rally in the metal index. 
 

Over the past one year, the stock has underperformed the frontline indices. While the Nifty50 index has gained 8.23 per cent between May 7, 2018 and May 6, 2019, Vedanta has slipped 41.5 per cent. Nifty metal index has also fallen by 18.32 per cent during the same period.