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Target: ₹280
CMP: ₹277.65
Our analysis of Vedanta’s Ltd FY23 annual report showed that desite volatility in prices and elevated input costs, domestic demand remained resilient for the company. Metal consumption in India is expected to remain robust, driven by the ‘trinity of manufacturing, infrastructure and energy.
Improved standards of living, higher income, urbanization and industrialization, coupled with the government’s thrust on infrastructure, construction, housing and power, augur well for the sector’s growth.
Vedanta is a metal and mining powerhouse with presence across zinc, lead, silver, aluminum, oil and gas, copper, ferro chrome, iron ore, power and steel. Vedanta is currently trading at 5.5x FY25E EV/EBITDA.
Any delay in repayment or failure to raise further capital at HoldCo will adversely impact VEDL. Almost 100 per cent of the promoter holding is pledged and any negative scenario will have an adverse impact on the company.
To meet debt repayment commitments at HoldCo, Vedanta declared a record dividend of ₹101.5 a share. We believe Vedanta will follow a similar strategy to adhere to future debt commitments. To fulfill its debt repayment commitments, Vedanta Resources relies heavily on dividend payouts by Vedanta, which in turn relies on HZL.
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