According to brokerage and research firm Edelweiss, Vedanta’s major strength is its increased EBITDA on the basis of increasing volumes despite low commodity prices. Through FY25E, on average, the brokerage is increasing EBITDA by 15% while taking greater volume projections for Vedanta into account.
It has lifted its target price for Vedanta shares to ₹355 per share (up from ₹265), while retaining a Buy rating on the company and believing that EBITDA, ESG, and dividend are among many other grounds to celebrate for Vedanta.
Sunil Duggal, CEO of Vedanta (VEDL), met with analysts from Edelweiss to discuss the company’s strategic plans, ESG efforts, and growth prospects. The main takeaways from the meeting were the commitment to ESG criteria that are superior to industry standards and the fact that the divisions responsible for producing aluminium and zinc are the main growth drivers. During the conversation, Duggal brought out Vedanta’s advantage: all of its businesses are poised for expansion, which could significantly increase its EBITDA over the next years.
The significant differentiators, in our opinion, are Vedanta’s robust ESG effort and careful capital allocation structure. I Firm decarbonization objectives, including those for green aluminium and copper, water positively, and waste management. ii) Parental debt reduction will likely be accomplished by upstreaming dividends without using intercorporate deposits (ICD). iii) Committed to deleveraging VRL by $4 billion iv) A strategy for disciplined capital allocation that balances cash returns and growth. The letter said, “We think the three-pronged focus on profits growth, ESG, and cash returns to be reassuring.
With revised volume growth projections across divisions, Edelweiss expects EBITDA to rise 15–16% from FY23–25E. Additionally, through FY25E, it anticipates Vedanta Ltd. to achieve an above-average RoE of 31% (compared to worldwide diversified firms’ 20%). It has maintained the value multiple at 4x, keeping pace with other globally diversified firms.
Following the Mumbai-listed company’s announcement that the manufacturing division will be under the control of family trust Volcan Investments Ltd, shares of the company plunged as much as 9% on Friday, ending a six-day winning streak, according to Bloomberg.