Will Vedanta’s Second Quarter Earnings Justify The Rally? 

Billionaire Anil Agarwal-led Vedanta Ltd. is expected to report net profit of Rs 962 crore, according to Bloomberg consensus estimates. If that happens, it will be the mining company’s highest profit figure in the last four quarters.

On a consolidated basis however, the company’s financials are unlikely to present a pretty picture. Vedanta is expected to see a 4 percent fall in revenue while earnings before interest, tax, depreciation and amortisation (EBITDA) is expected to rise 3.5 percent on a year-on-year basis. Net profit may show a 1 percent decline in the same period.

EBITDA is likely to improve on the back of higher aluminium and zinc prices. Aluminium and zinc prices rose 3 percent and 17 percent respectively, on a quarterly basis. The benefit of this price rise will partially be offset by lower iron ore volumes due to the monsoon season.

What To Watch:

• Commentary on the Cairn India merger
• The commissioning of a 1.25 million tonne/annum capacity smelter in Odisha

Beating Benchmark

Year-to-date, the Vedanta stock has outperformed the Nifty metal index nearly 2.8 times. The stock jumped 121 percent compared to a 43 percent rise on the Nifty Metal Index.

Eighty-two percent of analysts tracked by Bloomberg have a ‘buy’ rating on this stock, while the target price is a tad above the last traded price of Rs 199.65 apiece.