Vedanta stock rallies 15% in one week as market cap climbs to Rs 2 trn

Vedanta will hold a board meeting on Tuesday, October 8, to consider and approve the fourth interim dividend for the financial year 2024-25.

Shares of Vedanta have continued their upward trajectory to hit a new high of Rs 515.85, after gaining 3 per cent on Friday’s intra-day trade, on the BSE.

The stock of the Anil Agarwal-promoted company has rallied 8 per cent in two days, after it announced the schedule of a board meeting to consider the fourth interim dividend for FY25. 

In one week, the stock of the diversified metal conglomerate has surged 15 per cent, as compared to the 1.3 per cent rise in the BSE Sensex. It surpassed its previous high of Rs 506.85 that it touched on May 22, 2024.

A sharp rally in the stock price of Vedanta has seen the Vedanta Group company's market capitalisation surpass the Rs 2-trillion mark on Friday.

At 10:08 AM, with a market cap of Rs 2 trillion, Vedanta was trading 2 per cent higher at Rs 512.20. In comparison, the BSE Sensex was up 0.14 per cent at 85,959.

Vedanta, in an exchange filing on Wednesday, said that a meeting of the board of directors of the company is proposed to be scheduled on Tuesday, October 8, 2024, to consider and approve the fourth interim dividend on equity shares, if any, for the financial year 2024-25.

The company has fixed Wednesday, October 16, 2024, as the record date for the purpose of determining the entitlement of the equity shareholders for the said dividend payout.

Vedanta had earlier this financial year paid interim dividends of Rs 11 (1,100 per cent), Rs 4 (400 per cent), and Rs 20 (2,000 per cent) on three different occasions, aggregating to a sum of Rs 35 per equity share with face value of Re 1 each fully paid up, for FY25.

The financial year 2024-25 is expected to be a transformative one for Vedanta on many fronts. The expected completion of most of its expansion projects and the focus on disciplined growth, operational excellence and exploring opportunities along the value chain, position the company for greater success on various fronts, including volumes, revenue, cost efficiency and bottom line, Vedanta said in its FY24 annual report.

Beyond that, the company has set targets that reflect its pursuit of sustainable growth and further improving the company’s balance sheet integrity. The management said it seeks to further deleverage Vedanta Resources by $3 billion over the next three years.

“Our team is energised and the fundamentals supporting the sectors in which we operate remain robust, providing an optimistic outlook. We believe that the key growth projects that are on the horizon, along with the expected acceleration in commodity prices, will drive future profitability,” Vedanta said.

The mining company is witnessing various positive developments, capacity expansion, cost reduction, Improving liquidity and overall financial muscle with net debt/EBITDA dropping to 1.2x.

Analysts at Centrum Broking believe the company is set to reap earnings and margins growth over the next two to three years and it can achieve $10 billion in Ebitda over the next five years.

“We maintain our FY25/FY26 DPS estimate of Rs 45 per share (around 11 per cent dividend yield), as Vedanta intends to reduce leverage of the parent company, Vedanta Resources (VRL),” the brokerage firm said.

In the April to June quarter (Q1FY25), Vedanta reported a healthy OPBITDA (operating profit before interest, tax, depreciation, and amortisation) of around Rs 10,275 crore vis-à-vis around Rs 6,975 crore in Q1FY2024.

The company is expected to report an OPBITDA in the range of around Rs 48,000 crore to Rs 49,000 crore (including brand fees) in FY25, on expectation of healthy realisation in the near term and Vedanta’s sustained cost reduction initiatives across segments. 

Further, the full ramp-up of the enhanced alumina refineries capacities and the expected commencement of the captive coal and bauxite blocks in the near term would impart cost efficiency and is likely to partially hedge the profits in the medium-term against the volatility in commodity prices.

Once operationalised, Vedanta would be better placed to withstand the shocks during the cyclical downturns.

The share of value-added products is also likely to increase, supporting the operating margins, saidratings agency ICRA.