Before this correction, shares of Vedanta had jumped about five-fold from its Covid-lows, when the stock had slipped below Rs 65. However, the stock has remained flat in the last one year.
Interestingly, brokerage firms see more steam left in it and anticipate an up to 20 per cent rise in stock of the diversified mining major.
Vedanta’s chairman Anil Agarwal said a ‘team of professionals’ had chosen Gujarat as the location for the Vedanta-Foxconn combine’s upcoming Rs 1.5-lakh crore semiconductor and display fabrication plant, leading a political row.
Vedanta had emerged as the highest bidder for two coal mines in Odisha on the second day of commercial coal mines auction. The government put on sale 10 coal mines under the commercial coal mine auction.
The promoters were looking to delist the company at an offer price of Rs 79, and the stock quadrupled from those levels, as the offer failed after Life Insurance Corporation (
) quoted a price of Rs 320 per share to tender.
Vedanta is reportedly amongst the highest corporate contributors to the exchequer.
Brokerage firms remain positive on the mining firm as they believe aluminium and zinc divisions are the key growth drivers; boost production in O&G business and superior dividend payouts from the pure commodity play.
Vedanta’s EBITDA uptick on the back of higher volumes, despite low commodity prices, is its key strength, said
. Despite assumption of progressively declining commodity prices, it stands to gain from volume uptick across its Al, zinc, O&G and ferrous divisions, and backward/forward integration in the Al division, it said.
“We are raising EBITDA by 15 per cent through FY25E on average factoring in higher volume estimates,” it added, with maintaining a bull call and revising its target price to Rs 355 from Rs 265 earlier.
A recent sharp fall in commodity prices due to inflationary risk and recession fear would mean further deterioration in performance in 2Q, which we expect would bounce back, expecting the coal situation to improve as linkage supply is gradually improving, said Phillip Capital in its report.
While Zinc India continues to act as an anchor business and earning majority of cash flows, aluminium remains a promising prospect on a three-fold improvement strategy, it said. “Strong cash flows will continue to drive good dividends as well since parents have huge debt repayment obligations.”
If Vedanta management maintains its promise on better corporate governance, it may see some re-rating as well, Phillip Capital added, maintaining a buy tag on the counter with a target price of Rs 340.
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