Bengaluru, December 11, 2024: Shares of Vedanta Limited touched a new 52-week high of Rs 525 during the trading session on Wednesday backed by strong fundamentals and progress on the company’s demerger plans. It closed at Rs 513.80, gaining 2.71 %.
Vedanta’s shares have rallied nearly 100% year to date, showing a 5x outperformance on the Nifty metal index which has rallied ~19%. The company’s market cap also crossed the crucial Rs 2 lakh crore mark in this financial year.
Multiple factors account for the strength of the company’s stock. Brokerages and credit rating agencies have upgraded their outlook on Vedanta based on developments during the past few quarters.
Brokerage Nuvama and ICICI Securities have a price target of Rs 663 and Rs 600 on Vedanta respectively. On the operational front, Vedanta is focusing on volume growth, having completed two important projects in the first half of this fiscal. These include commissioning of the 1.5 MTPA unit of the Lanjigarh Refinery expansion project and operationalizing the Bicholim iron ore mine at Goa, which has a 3MTPA capacity.
Rating agency CRISIL recently said in its recent report that Vedanta’s consolidated operating profitability (EBITDA, excluding brand and management fees to VRL) is expected to increase to more than Rs 45,000 crore in fiscal 2025, mainly supported by volume growth in aluminium, zinc international and iron ore segments, improved cost efficiencies in zinc and aluminium and healthy metal prices. The rating agency upgraded its rating on Vedanta’s long-term bank facilities and debt instruments to ‘AA’ from ‘AA-’
CRISIL also factored in Vedanta’s moves to deleverage its balance sheet and improving financial flexibility in its rating rationale. “The promoters and group management have been articulating about increased focus on deleveraging balance sheets at VRL as well as at operating levels. This commitment has been reflected in recent fundraising events such as QIP and OFS by Vedanta, and stake sale by VRL which have resulted in cumulative fundraising of USD 1.9 billion by the group during April-August 2024.” the rating agency had said in its report, while expecting Vedanta’s net debt to continue declining further after FY 2025 as well.
