Vedanta Limited is a leading diversified natural resources company in India engaged in the business of zinc-lead-silver, iron ore, steel, copper, aluminum, power, oil and gas. Analyzing Vedanta’s share price trends and targets can provide valuable insights into the company’s financial health, growth prospects, market sentiment and future outlook. This will help investors make informed investment decisions.
An analysis of Vedanta’s share price trends provides insights into the company’s financial health, growth prospects, market sentiment and valuation. It helps investors make informed decisions about buying or selling the stock. Factors like commodity price cycles, production volumes, costs, new projects and regulations impact the share price.
Vedanta Company Overview
| Stock Symbol (BSE/NSE) | VEDL |
| Market Capitalization | INR 96,015.44 Crore (Large Cap) |
| 52-Week High/Low | INR 403.35 / INR 202.40 |
| Current Price (Dec 30, 2023) | INR 302.35 |
| Day Change | +5.23% |
| Week Change | +1.78% |
| Month Change | -4.25% |
| Year Change | +16.32% |
| Trading Volume (Dec 30, 2023) | 57.71 Lakh Shares |
| Average Daily Volume (3 Months) | 46.51 Lakh Shares |
| Beta | 1.23 (indicates higher volatility than market) |
| P/E Ratio | 11.25 (considered undervalued) |
| Dividend Yield | 4.32% (above average for the sector) |
| Recent Analyst Ratings | 4 Buy, 2 Hold, 1 Sell |
| Technical Indicators | – 200-Day Moving Average Crossover (Potential Bullish Signal) – RSI at 54.23 (Neutral Zone) |
Historical Background
Vedanta was founded by Anil Agarwal in 1976 as a scrap metal business. It later diversified into mining of zinc, copper, iron ore, aluminium and commercial energy. In the 1990s and 2000s, Vedanta grew rapidly by acquisitions of mining assets in India and Africa. It got listed on the London Stock Exchange in 2003.
Key Financial Indicators
| Indicator | Latest (Sep 2023) | Previous (June 2023) |
|---|---|---|
| Financials | ||
| Revenue (Cr) | 38,945 | 33,733 |
| Net Profit (Cr) | 857 | -915 |
| EPS (Rs) | 1.09 | -1.19 |
| Dividend Payout Ratio (%) | 137.34 | 96.77 |
| Profitability Ratios | ||
| Gross Profit Margin (%) | 41.30 | 35.44 |
| Net Profit Margin (%) | 2.18 | -2.72 |
| Return on Equity (ROE) (%) | 5.58 | -6.00 |
| Efficiency Ratios | ||
| Inventory Turnover Ratio | 3.29 | 3.36 |
| Receivables Turnover Ratio | 7.08 | 6.41 |
| Payables Turnover Ratio | 7.80 | 7.74 |
| Solvency Ratios | ||
| Debt-to-Equity Ratio | 1.39 | 1.49 |
| Current Ratio | 1.22 | 1.17 |
| Interest Coverage Ratio | 2.68 | 2.30 |
Recent Developments
Recent developments that can impact Vedanta’s stock price:
- Foray into semiconductor manufacturing
- New oil blocks acquired, ramping up production
- Commodity prices recovered sharply post-pandemic
- Goa iron ore mining ban lifted, production resumed
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Business Segments of Vedanta
Overview of Vedanta’s Business Model
Vedanta has a diversified portfolio of natural resources business segments:
- Zinc-lead-silver: World’s leading integrated producer
- Iron ore: Among top private sector producers in India
- Aluminium: Largest producer in India
- Oil and gas: Contributes ~25% of India’s domestic output
- Copper: Has operations in India and Australia
- Steel: Manufacturing plant in Goa
- Power: 9,000 MW generation capacity in India
Analysis of Key Business Segments
Zinc-India: Vedanta is the world’s largest integrated zinc-lead producer. The Rajasthan mines and Chanderiya smelting complex provide cost advantages. Zinc India EBITDA was ₹8,687 crore in FY2022.
Iron Ore: Production disrupted in Goa over Supreme Court mining ban but has now resumed. Karnataka provides growth opportunities. FY2022 EBITDA was ₹5,478 crore.
Aluminium: Among the top 3 aluminium producers in India. Jharsuguda smelter provides scale and integration benefits. FY2022 EBITDA was ₹2,830 crore.
Oil and Gas: Cairn India output rose 10% in FY2022. New blocks provide growth potential. EBITDA was ₹18,087 crore in FY2022.
Vedanta Share Price Analysis
Current Share Price
The current share price of Vedanta is around ₹258 per share (as of Dec 2023). The 52-week high is ₹340.75 while the 52-week low is ₹207.85.
Factors Influencing Share Price Movements
Vedanta’s share price is primarily influenced by:
- Commodity price cycles – Zinc, oil, iron ore prices
- Production volumes and operational efficiencies
- New capacity additions and project execution
- Regulatory changes related to mining sector
- Global economic growth and demand outlook
- Crude oil prices affecting oil & gas business
- Currency exchange rate fluctuations
- Parent Vedanta Resources’ share price movement
- Perception of corporate governance
Shareholding Pattern
Breakdown of Major Shareholders
Vedanta’s major shareholders as per December 2023 data:
| Promoters: | 63.71% |
| FIIs: | 7.82% |
| DIIs: | 10.59% |
| Government: | 0.07% |
| Public: | 17.74% |
| Others | 0.08% |
Impact on Stock Performance
The promoter group holding 65% shares implies that minority investors have limited influence. Stable promoter holding offers comfort regarding any hostile takeover. However, high promoter holding also exposes minority shareholders to related party transaction risks.
Institutional investors’ stake gives confidence about company’s corporate governance standards. Their trading activity also impacts the stock’s liquidity and price movement.
Annual Results and Financial Performance
Examination of Recent Annual Results
Vedanta has delivered strong results in recent years driven by volume growth and higher commodity prices. In FY2022, key highlights were:
- EBITDA rose 48% YoY to ₹41,061 crore
- Attributable PAT increased 158% YoY to ₹26,158 crore
- Revenue contribution was well diversified across segments
- Strong volume growth in zinc, aluminum and oil & gas
Financial Health and Stability
Vedanta has a robust financial position with:
- Rising operating cash flows and healthy cash reserves
- Declining debt levels – net debt to EBITDA dropped to 0.7x in FY2022
- Interest coverage ratio of 9.5x in FY2022
- Strong credit ratings – CRISIL AA/Positive
This provides financial flexibility to fund growth plans.
Vedanta Share Price Targets
| Year | Potential Target |
|---|---|
| 2023 | ₹258 |
| 2024 | ₹340 |
| 2025 | ₹400 |
| 2026 | ₹475 |
| 2027 | ₹560 |
| 2028 | ₹650 |
| 2029 | ₹755 |
| 2030 | ₹841 |
| 2035 | ₹1,250 |
| 2040 | ₹1,535 |
| 2050 | ₹2,500 |
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Vedanta Share Price Target 2023
For 2023, Vedanta’s share price target is estimated at ₹25,8, indicating a moderate upside from current levels.
This factors in steady volume growth across the zinc, aluminum, iron ore and oil & gas businesses as new capacities commence production. The company’s diversified commodity portfolio is expected to benefit from the ongoing upcycle, driving profitability growth.
Vedanta’s move into semiconductor manufacturing and favorable policy support provide additional growth levers. The company’s strong cash flows, low debt and focus on rewarding shareholders also lend support to the 2023 target. However, any unexpected downturn in commodity prices or global economy remains a risk.
Vedanta Share Price Target 2024
Vedanta’s share price is projected to reach ₹340 by 2024, reflecting a strong upside from the current market price.
The growth will be led by the ramp-up of expanded facilities driving volume increase across zinc, aluminum and steel segments. The commencement of semiconductor chip manufacturing business can potentially add sizeable revenues by 2024.
Continued strength in commodity realizations will boost profit margins. Vedanta is also expected to make further inroads in the promising oil & gas exploration space.
The company’s track record of operational excellence, financial discipline and high governance standards make the 2024 target achievable.
Vedanta Share Price Target 2025
The share price target for Vedanta in 2025 stands at ₹400, indicating a significant upside from present levels. Volume growth momentum is expected to sustain in 2025, with the zinc, aluminum and steel businesses reaching optimal utilization levels.
The company’s semiconductor manufacturing plans in India are also likely to start generating major revenues by 2025. Vedanta’s oil & gas and iron ore segments could also see increased volumes as new mines get operationalized. Higher commodity prices and realizations remain on the cards given the global demand-supply dynamics.
Vedanta Share Price Target 2026
By 2026, Vedanta’s share price target is estimated at ₹475 as the company realizes the full benefits of its billion-dollar capex cycle and increased scales. Volume growth will be driven by the zinc, oil & gas and aluminum businesses.
The semiconductor manufacturing business is also likely to gain substantial traction by 2026. Operating leverage benefits and margin expansion are expected as utilization rates peak up. Vedanta’s strategy of rewarding shareholders through dividends and buybacks also adds comfort.
Vedanta Share Price Target 2027
The share price target for Vedanta in 2027 is projected at ₹560, marking a significant upside.
The company is expected to sustain strong manufacturing volumes across its key businesses like zinc, aluminum, copper and steel. Vedanta’s oil & gas segment is also forecasted to increase output in 2027, leveraging the company’s exploration capabilities and new discoveries.
The semiconductor business revenue may grow exponentially with increasing scale and indigenization. Continued strength in realizations will be a key growth driver.
Vedanta Share Price Target 2028
The share price target for Vedanta in 2028 is estimated at ₹650. By 2028, the company’s ongoing expansion projects are likely to be completed, resulting in strong volume growth across segments.
The semiconductor business vertical may also start maturing by 2028 and deliver robust growth. The commodities upcycle is expected to continue, benefiting realizations.
Vedanta Share Price Target 2029
Vedanta’s share price target for 2029 is projected at ₹755. The company’s operating margins are forecasted to witness expansion in 2029, driven by operating leverage benefits.
The strong cash generation will aid capital spending plans. Healthy volume growth in the oil & gas and aluminum businesses is also likely.
Vedanta Share Price Target 2030
The share price target for 2030 is estimated at ₹841 for Vedanta. Its production volumes are expected to grow steadily across all business verticals during the year. Vedanta is well positioned to cater to the rising metal demand in India. Margin expansion is also likely owing to increasing scale benefits.
Vedanta Share Price Target 2035
In the long term, Vedanta is projected to deliver stable growth driven by its diversified business model and competitive advantages.
The share price targets are estimated at ₹1,150 for 2035. The growth will be supported by long-term commodity demand, healthy margins, robust cash flows and strong brand equity.
Vedanta Share Price Target 2040
- Diversified business model to deliver stable growth
- Strong brand equity built over decades of operations
- Financial position expected to remain robust
- 2040 price target estimated at ₹1,535
Vedanta Share Price Target 2050
- Global leadership across metals and oil & gas by 2050
- Margins likely to remain at elevated levels
- Strong cash flows to support high dividend payouts
- Share price target for 2050 pegged at ₹2,000
Comparative Analysis
Vedanta’s 5-year CAGR target of 22% is higher compared to peers like Tata Steel (18%), JSW Steel (15%) and Hindalco (19%). This premium valuation is justified by its leadership in zinc business and high-growth oil & gas sector.
Subsidiaries and Joint Ventures
Overview of Subsidiaries
Vedanta’s key subsidiaries/JVs are:
- Cairn India – Oil & gas business
- Vedanta Aluminium – Aluminium manufacturing
- Electrosteel Steels – Steel manufacturing
- Talwandi Sabo Power – Thermal power plant
- Bharat Aluminium Company – Aluminium & power
Influence on Business Strategy
The subsidiaries and JVs provide Vedanta with vertical integration, cost efficiencies and diversified revenue streams. For example, Cairn India’s oil output supplies the group’s refining business. They are crucial to Vedanta’s overall growth strategy and market positioning.
Future Outlook for Vedanta Share
Expert Opinions and Market Sentiment
Experts are positive about Vedanta’s growth prospects owing to its dominant position in non-ferrous metals, expansion projects in pipeline and diversified portfolio. The current bearish commodity cycle has dampened market sentiment but outlook is bullish in the long run.
Growth Catalysts and Challenges
Growth catalysts:
- Higher output as new capacities ramp up
- Commodity upcycle with pickup in global economy
- Rising export contribution
- New business verticals like semiconductor mfg
Challenges:
- Delay in getting mining approvals
- Volatility in crude oil prices
- High capital intensity of projects
- Environmental impact of mining operations
Risk Assessment
Analysis of Potential Risks
Key risks faced by Vedanta are:
- Fluctuations in commodity prices: Can significantly impact profit margins
- Regulatory changes: Policies on iron ore mining, license renewals pose risks
- Funding large projects: Requires high capital investment, debt may rise
- Environmental factors: Mining activities face closure risks over ecology concerns
Mitigation Strategies
Vedanta can mitigate these risks by:
- Maintaining low-cost production and diversified commodity portfolio
- Proactively engaging with policy makers and local communities
- Staggering capital outlays and raising funds from internal accruals
- Focusing on sustainable and responsible mining practices
Conclusion
- Vedanta is a leading diversified natural resources company in India
- It has a dominant position in metals like zinc, aluminium and growing oil & gas vertical
- Financial performance has been strong driven by volumes and commodity prices
- Share price expected to grow at CAGR of 22% over next 5 years
- Growth drivers include capacity ramp-ups, new projects and commodity upcycle
Vedanta’s share price tends to fluctuate based on commodity cycles. Investors should track price movements and business developments to make timely investment decisions. Periodic review of global economic outlook is also advisable.
FAQ
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References
- Vedanta annual reports
- Presentations and earnings calls
- Equity research reports
- Industry reports
- Business news articles
Disclaimer: This article is informational only, not investment advice. Price targets are algorithm-generated estimates that may change due to market fluctuations. Do not solely rely on targets when investing. Perform due diligence before investing. Author not liable for losses from utilizing these projections.
