Vedanta Ltd Stock's Outlook Positive, Brokerage Says BUY For Rs 537 Target; 1:6 Demerger Update

Billionaire Anil Agarwal-backed Vedanta Ltd's outlook is positive after Q2 results. On Monday, November 11, Vedanta stock traded in the green. Vedanta is among the top dividend yield large-cap and metal stocks. The next big event in Vedanta is its business split-up in the ratio of 1:6. As per the latest development, Vedanta's demerger is now expected to be completed by FY25-end. Brokerage Phillip Capital has recommended BUY on the stock.

Vedanta Share Price:

At the time of writing, Vedanta stock traded at Rs 460.05 apiece, up by 0.5% on BSE. Its market cap was around Rs 1,79,799.64 crore. The stock's 52-week high and low is currently at Rs 523.60 apiece and Rs 230.65 apiece respectively.

YTD, the stock zoomed by 19% on BSE so far. The price-to-equity ratio of Vedanta is currently at 9.98x, while the return on equity is at 27.36%.

Vedanta Demerger:

In its financial results report, Vedanta last week said, its demerger is on track and in its final stages, with shareholder and creditor meetings scheduled in the coming months.

As per media reports, the demerger is likely to be completed by March 2025 end, while earlier Agarwal stated that they plan to complete the demerger by December 2024-end.

Among much-awaited developments in Vedanta is its demerger into six businesses, aka a 1:6 ratio. Vedanta has received approval to demerger 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.

Vedanta Q2 Results:

Vedanta posted consolidated revenue of Rs 37,171 crore, up 5% QoQ and 10% YoY. While its consolidated EBITDA stood at Rs 10,364 crore in Q2FY25, up 44% YoY. Notably, this is the second quarter in a row where Vedanta posted EBITDA above Rs 10,000 crore. While its quarterly PAT stood at Rs Rs 5,603 crore.

Vedanta has raised Rs 8,500 crore through QIP and Rs 3,133 crore through the Offer for Sale (OFS) of HZL in the quarter. Its parent company, Vedanta Resources also successfully raised $1.2 billion through a bond issue and reduced the interest costs on this debt by over 3%. Net Debt at the parent entity was reduced by $1bn in the first half to reach its lowest level in a decade.

BUY Vedanta Stock:

In its latest report, Phillip Capital said, "We continue to hold our positive outlook on the company as we feel the commodity prices have legroom to improve from here aided by FED rate cuts and potential stimulus in China."

The brokerage's note added that the demerger of business rating upgrades will augur well for the company. With debt-related issues largely settled in the medium term, it said, "the company continues to focus on growth and guiding for US$ 7.5-10bn of EBITDA in future (we have taken a conservative stance at c. US$ 6bn). Maintain Buy with SOTP target of Rs 537."

About Vedanta:

Vedanta Limited ("Vedanta"), a subsidiary of Vedanta Resources Limited, is one of the world's leading critical minerals, energy and technology companies spanning across India, South Africa, Namibia, Liberia, UAE, Saudi Arabia, Korea, Taiwan and Japan with significant operations in Oil & Gas, Zinc, Lead, Silver, Copper, Iron Ore, Steel, Nickel, Aluminium, Power & Glass Substrate and foraying into electronics and display glass manufacturing. For two decades, Vedanta has been contributing significantly to nation building.