Shares of Vedanta Ltd have recovered over 14% from its 52-week low price of ₹207.85, a level seen on September 28, 2023, even as the mining major slipped into the red in the September quarter with a net loss of ₹1,783 crore, against a profit of ₹1,808 crore a year ago.
The loss was mainly due to a sharp increase in the net tax outgo during the quarter. The net tax outgo rose to ₹9,092 crore from ₹1,674 crore a year ago, due to tax deduction on a one-time gain of ₹1,223 crore, and on account of the adoption of the new tax regime.
At the operating level, the Anil Agarwal-led company put up a robust show, with operating profit calculated as earnings before interest, taxes, depreciation and amortization (EBITDA) growing 49% on-year to ₹11,479 crore. Subsequently, the operating margin expanded 847 basis points to 29.47%.
Vedanta shares have slipped 25% since the beginning of this year. The stock has declined 30% from its one-year high level of ₹340.75, hit on January 20 this year. On Wednesday, it settled 0.021% lower at ₹0.021%.
On technical setup, support on the counter could be seen at ₹228 levels. On the higher side, the stock may move towards ₹260-280 levels. "Till the time Vedanta is able to sustain above 228 level 'buy on dip' strategy can be made for an upside move towards 260-280 levels," said Kunal N Kamble, Senior Technical Research Analyst at Bonanza Portfolio.
After a correction of 53% from its all-time high, Vedanta was able to move upward by 66% and again a correction was witnessed that lead to another correction of 32%, Kamble said.
"At lower level on a Daily time frame the security had formed an EVE & EVE formation and a breakout was witnessed, which is leading to change in trend. The price is trading just above the Slow EMA (50) and trading close to Fast EMA (100), a pause in the move can be expected near the Fast EMA, for any decisive move the price need to trade above both the EMA's for an upside move," the analyst said.
Kamble further noted that the momentum Indicator RSI (relative strength index) has given a breakout of the falling trend line, which is supporting the price action.
"On the Directional front DI+ is trading above DI- indicating an upward direction whereas the ADX trading above the DI- is indicating strength in the upward move. Price trading above the Fast(100) EMA would increase interest of buyer which can led into an impulsive move ahead," he said.
Shiju Koothupalakkal, Technical Research Analyst at Prabhudas Lilladher said, "The stock has shown some recovery from the low made near 210 zone with a pullback witnessed to move past the significant 50EMA level of 230 zone slightly improving the bias to some extent."
Further, Koothupalakkal said it needs to breach the near-term resistance zone of 247 level of important 100 period MA to establish some conviction and expect for further upside move.
"The important long term moving average of 200 period MA lies near 269 levels above which the overall trend can be considered to turn strong and anticipate for strong upward move," the analyst added.
In a major development, the Vedanta Group is said to be working with JPMorgan Chase & Co. to advise on an overhaul of the Indian conglomerate announced in September, according to a Bloomberg report.
The development suggests Vedanta is progressing on its plans to simplify the complex financial structure. The group is also seeking funding to repay around $3 billion of dollar bonds due over the next two years, the report added.
“A demerger of this size and scale needs to go through multiple processes including stock exchange notifications,” a Vedanta spokesperson told Bloomberg. “We are in the process of appointing advisors, which will be finalized in due course, after initial regulatory approvals.”
The loss was mainly due to a sharp increase in the net tax outgo during the quarter. The net tax outgo rose to ₹9,092 crore from ₹1,674 crore a year ago, due to tax deduction on a one-time gain of ₹1,223 crore, and on account of the adoption of the new tax regime.
At the operating level, the Anil Agarwal-led company put up a robust show, with operating profit calculated as earnings before interest, taxes, depreciation and amortization (EBITDA) growing 49% on-year to ₹11,479 crore. Subsequently, the operating margin expanded 847 basis points to 29.47%.
Vedanta shares have slipped 25% since the beginning of this year. The stock has declined 30% from its one-year high level of ₹340.75, hit on January 20 this year. On Wednesday, it settled 0.021% lower at ₹0.021%.
Tech View
On technical setup, support on the counter could be seen at ₹228 levels. On the higher side, the stock may move towards ₹260-280 levels. "Till the time Vedanta is able to sustain above 228 level 'buy on dip' strategy can be made for an upside move towards 260-280 levels," said Kunal N Kamble, Senior Technical Research Analyst at Bonanza Portfolio.
After a correction of 53% from its all-time high, Vedanta was able to move upward by 66% and again a correction was witnessed that lead to another correction of 32%, Kamble said.
"At lower level on a Daily time frame the security had formed an EVE & EVE formation and a breakout was witnessed, which is leading to change in trend. The price is trading just above the Slow EMA (50) and trading close to Fast EMA (100), a pause in the move can be expected near the Fast EMA, for any decisive move the price need to trade above both the EMA's for an upside move," the analyst said.
Kamble further noted that the momentum Indicator RSI (relative strength index) has given a breakout of the falling trend line, which is supporting the price action.
"On the Directional front DI+ is trading above DI- indicating an upward direction whereas the ADX trading above the DI- is indicating strength in the upward move. Price trading above the Fast(100) EMA would increase interest of buyer which can led into an impulsive move ahead," he said.
Shiju Koothupalakkal, Technical Research Analyst at Prabhudas Lilladher said, "The stock has shown some recovery from the low made near 210 zone with a pullback witnessed to move past the significant 50EMA level of 230 zone slightly improving the bias to some extent."
Further, Koothupalakkal said it needs to breach the near-term resistance zone of 247 level of important 100 period MA to establish some conviction and expect for further upside move.
"The important long term moving average of 200 period MA lies near 269 levels above which the overall trend can be considered to turn strong and anticipate for strong upward move," the analyst added.
Vedanta business overhaul
In a major development, the Vedanta Group is said to be working with JPMorgan Chase & Co. to advise on an overhaul of the Indian conglomerate announced in September, according to a Bloomberg report.
The development suggests Vedanta is progressing on its plans to simplify the complex financial structure. The group is also seeking funding to repay around $3 billion of dollar bonds due over the next two years, the report added.
“A demerger of this size and scale needs to go through multiple processes including stock exchange notifications,” a Vedanta spokesperson told Bloomberg. “We are in the process of appointing advisors, which will be finalized in due course, after initial regulatory approvals.”
Note To Readers
Disclaimer: The views and investment tips expressed by investment experts on CNBCTV18.com are their own and not that of the website or its management. CNBCTV18.com advises users to check with certified experts before taking any investment decisions.
First Published: Nov 9, 2023 8:09 AM IST
Check out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!
