Vedanta Ltd's shares surged to a nearly two-year high on Wednesday, rising as much as 7.7% after foreign brokerage firm CLSA upgraded the stock to a "buy" rating from "underperform."
So far this year, Vedanta's shares have soared by over 40%, outpacing the 13% gain seen in the Nifty Metals index.
advertisementAs of 11.23 am, Vedanta's shares were trading 6.61% higher at Rs 360.55.
Last year, Vedanta's shares faced a downturn, dropping by 16.2% due to subdued quarterly results.
It may be noted that the company also faced pressure from its parent company, Vedanta Resources, which struggled with high debt levels and credit downgrades.
Vedanta Ltd's shares surged to a nearly two-year high on Wednesday, rising as much as 7.7% after foreign brokerage firm CLSA upgraded the stock to a "buy" rating from "underperform."
The move comes amid expectations that the mining company will benefit from the current surge in metal prices.
So far this year, Vedanta's shares have soared by over 40%, outpacing the 13% gain seen in the Nifty Metals index. This has been driven by a sizeable increase in industrial and precious metals prices, reflecting optimistic forecasts for global demand.
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As of 11.23 am, Vedanta's shares were trading 6.61% higher at Rs 360.55.
CLSA also revised its price target for the stock to Rs 390, making it the second-highest target after Nuvama's Rs 394.
It may be noted that six of the 12 analysts covering Vedanta have issued a "buy" rating, with a median price target of Rs 305, according to LSEG data quoted in a Reuters report.
Why CLSA is bullish on Vedanta?
CLSA’s positive outlook for Vedanta is not only higher commodity prices but also the company's efforts to enhance capacity and profitability across its segments through ongoing capital expenditure initiatives.
Last year, Vedanta's shares faced a downturn, dropping by 16.2% due to subdued quarterly results.
Soon after, its billionaire owner Anil Agarwal to announce a comprehensive overhaul plan, dividing the conglomerate into six separate businesses.
It may be noted that the company also faced pressure from its parent company, Vedanta Resources, which struggled with high debt levels and credit downgrades.
While the parent company has managed to reduce its debt by $3.5 billion over the past two years, Vedanta Ltd's debt has increased by $4.7 billion to $7.5 billion, a factor that CLSA highlighted as important to monitor.
In addition to the ratings upgrade, CLSA raised its earnings before interest, taxes, depreciation, and amortization estimates for Vedanta Ltd for the years 2024-2026 by 4% to 13%. This further contributed to the positive sentiment surrounding the company's stock.
