Vedanta shares fell over 4 percent after CLSA cut the target price of the stock to Rs 135 per share from Rs 170 post the results. The brokerage retained its 'sell' rating as concerns over related party transaction to remain an overhang.

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For the March-quarter, the company reported a 45 percent year-on-year (YoY) drop in its net profit at Rs 2,615 crore as compared to a net profit of Rs Rs 4,802 crore a year ago. Consolidated revenue stood at Rs 23,468 crore for the March quarter, as compared with Rs 27,630 crore in the same period of 2018-19, Vedanta said in a regulatory filing.

Vedanta shares fell as much as 4.09 percent to Rs 156.80 per share intraday on the NSE. So far this year, the stock has declined over 21 percent, and it fell over 43 percent in the last one year.

At 9.40 AM, the stock price was trading at 158.55 per share, down 3.03 percent from its previous close. The Nifty 50 was down 0.62 percent at 11,426.30.

"Vedanta’s EBITDA, which fell 22% YoY (up 9% QoQ) was 6% ahead of estimates. However, the 14-34 percent year-to-date rally in zinc and oil prices is benefiting Vedanta as these form 80 percent of its EBITDA. On the flip side, the slow volume ramp-up in zinc and oil, as well as increased costs in Hindustan Zinc, are concerns. Notwithstanding the above, we believe that concerns of related party transactions and the future use of cash will overshadow Vedanta’s earnings outlook. "

According to Motilal Oswal, lower cost of production (CoP) in aluminum and zinc international was the key driver of its growth and better-than-estimated performance. The brokerage raised PAT estimate by 3-4 percent for FY20/21 to factor in lower interest cost. The brokerage maintained a sell rating on the stock, with a target price of Rs 144 per share.

First Published:May 8, 2019 10:53 AM IST