ICICIdirect retains 'Hold' on Vedanta; target INR 135

ICICIdirect has maintained 'Hold' on Vedanta following announcement of company's first quarter results. The stock broker fixed price target to INR 135.

Commenting on the results, ICICIdirect said, ''Vedanta reported a mixed set of Q1FY16 numbers. The EBITDA came in below our estimates while on the back of forex gain, PAT came in higher than our estimates. The key disappointment came in from the aluminium segment on the back of a steep fall in aluminium realisations and premium. While the EBITDA of Vedanta Aluminium (VAL) declined 66% QoQ and 60% YoY to INR 1.78 billion, Balco reported an EBITDA loss of INR 1.69 billion.''

Commenting on the investment rationale, ICICIdirect said, ''For the quarter, Vedanta reported a muted performance on account of the subdued performance from the aluminium business. However, we were positively surprised by the zinc international and copper business. The aluminium business performance was disappointing on the back of muted prices and subdued premium."

However, the stock broker held a positive view on the company's other non-ferrous business (HZL) on account of strong underlying fundamentals. "We have a cautious view on the company due to the huge debt pile and a skewed EBITDA profile. We value the company using SOTP valuation and arrive at a target price of INR 135. We have a Hold recommendation on the stock'' said ICICIdirect.