Vedanta plunges 18% as Q3 profit falls 21%; CLSA downgrades stock on use of cash resources

Shares of Vedanta fell around 18 percent on Friday morning as investors turned wary of the stock after financial results.

The touched a 52-week low of Rs 162.05. It touched an intraday high of Rs 180.50 and an intraday low of Rs 162.05.

Vedanta has reported a 21 percent on year decline in third quarter consolidated profit to Rs 1,574 crore due to lower commodity prices and shutdown of copper smelter at Tuticorin.

Revenue from operations during the quarter dropped 2.8 percent to Rs 23,669 crore compared to year-ago. The sequential profit was up 17 percent and revenue up 4 percent.

“Revenue was lower mainly on account of shutdown of copper smelter at Tuticorin and lower commodity prices, partially offset by currency depreciation and higher volumes at Electrosteel and aluminium business,” Vedanta said.

At operating level, EBITDA (earnings before interest, tax, depreciation and amortisation) declined 11 percent year-on-year to Rs 5,953 crore, but sequentially EBITDA increased 13 percent and margin expanded 300 bps QoQ to 29 percent.

CLSA has downgraded the stock to sell, with a target cut to Rs 170 from Rs 250.

The brokerage is worried about use of its cash to fund investments for promoter holding company.

It is also concerned over related party transaction and potential use of cash in the future.

The brokerage cut FY19-21 EPS by 5-10% post Q3 results.
At 09:17 hrs Vedanta was quoting at Rs 165.80, down Rs 31.70, or 16.05 percent, on the BSE.

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