1:6 Split: Top 2024 Metal Stock Vedanta Hits 14-Year High Before Dividend, Fundraising Plan; BUY For 24% Gains

Vedanta and its subsidiary Hindustan Zinc (HZL) are the top two best-performing metal stocks of 2024. While HZL turned ex-dividend for a 500% payout, Vedanta which is also the highest dividend yield large-cap stock will be announcing its dividend rewards along with a fundraising plan on May 16. Accordingly, Vedanta stock will be in focus. Vedanta shares are overbought, and that's why the majority of analysts have suggested to book profits in the stock. But for the long-term, Vedanta has the potential of crossing Rs 500 plus levels.

Ahead of the dividend announcement, Vedanta shares stood at Rs 437.40 apiece, up by 1% on BSE with a market cap of Rs 1,62,590.18 crore after market hours of May 15.

During trading hours on Wednesday, Vedanta touched a new 52-week high of Rs 448.95 apiece. That being said, Vedanta is now over 14 years high. Vedanta shares were from Rs 440 to Rs 470 levels in late April 2010.

On May 16, Vedanta will announce the first interim dividend on equity shares, if any, for the Financial Year 2024-25. Further, the company fixed record date to determine the entitlement of the equity shareholders for the said dividend, if declared, on May 25, 2024.

Also, Vedanta's board will consider fundraising for the issue of equity shares or any other securities convertible into equity shares or a combination of such securities by way of further public offer, rights issue, American Depository
Receipts/Global Depository Receipts/Foreign Currency Convertible Bonds, qualified institutions placement, preferential issue or any other method as may be permitted under applicable laws.

In Q4FY24, the company posted consolidated revenue of Rs 34,937 crore, flat sequentially, while its EBITDA rose by 3% QoQ to Rs 8,969 crore with an EBITDA margin of around 30%. PAT excluding exceptional items in Q4FY24, came in at Rs 2,453 crore. Further, Vedanta recorded a decline of 10% in its net debt to Rs 56,338 crore. While it said, "Deleveraging of Rs 6,155 crore QoQ, significantly improved Net Debt/EBITDA to 1.5x from 1.7x."

Vedanta shares have been on the bullish trend throughout 2024. In the past five sessions, the stock is up by 8%, while its monthly upside is over 13%, and its six-monthly gains are around 83%. YTD, the stock is up by 70%.

Apart from this, Vedanta is on the move to split into a 1:6 ratio by December 2024-end.

The 1:6 Split Of Vedanta! Last year, in September, Vedanta announced the creation of a demerger of metals, power, aluminium, and oil and gas businesses to unlock potential value. After the exercise, six independent verticals - Vedanta Aluminium, Vedanta Oil & Gas, Vedanta Power, Vedanta Steel and Ferrous Materials, Vedanta Base Metals and Vedanta Limited - will be created.

The highest target price on Vedanta is by Nuvama. In its research report, the brokerage raised Vedanta's FY25E/26E EBITDA by 18%/23% factoring in higher commodity prices and lower CoP (conformity of production) in aluminium. Also, the brokerage believes that Vedanta's has peaked out in FY24.

Accordingly, Nuvama has raised Vedanta's target price to Rs 542.

In an interview with ET Now, Sudip Bandyopadhyay, Group Chairman, Inditrade Capital also recommended investors to buy Vedanta shares for Rs 500 plus target. He believes the value unlocking from the demerger is likely to unleash a lot of excitement in Vedanta shares.

He said in the interview that the value unlocking will unleash a lot of excitement into the company and the counter. So, maybe another six months down the line, a Vedanta shareholder will be holding six shares of six companies and all these companies are individually strategically positioned with a lot of potential. He has suggested a timeframe of 1-2 years for Vedanta's target of Rs 500 plus.