Brokerage and research firm Edelweiss spoke with Vedanta (VEDL) to get updates on its ongoing expansion plans, parent’s deleveraging target and more. Highlights of which were – FY24 being the year of commencement of the ongoing expansion in Zinc, Aluminium, Alumina, Coal; High dividend payout to continue in FY24 and FY25; Focus on curbing carbon emissions at the forefront.
“Vedanta’s low cost position in zinc and efforts to reduce its aluminum COP below $1,500/t on a sustainable basis (by FY26) will be long-term positives. The note said that expectation of China’s reopening (reviving demand) would help base metal prices to sustain higher, further supporting our financials.
Furthermore, the brokerage house expects Vedanta Ltd to pay a dividend per share (DPS) 48/ 45 in FY24E/25E, which means a Dividend Yield of around 15% on CMP (current market price). Edelweiss maintains ‘Buy/So’ rating on Vedanta shares with revised target price 374 each (before 355).
“We believe that most of the debt reduction at the Vedanta Resources (VRL) level will be through dividends received from Vedanta. The company has been consistently paying high dividends to repay VRL’s debt, in turn benefiting minority shareholders. It first introduced a capital allocation policy, stating that it would pass on the entire dividend received from HZ within six months; Additionally the company will pay a minimum of 30% of its respective profit (X-HZ) as dividend,” the note said.
Led by billionaire Anil Agarwal Vedanta Ltd. is the world’s leading mining and metals company with interests in zinc-lead-silver, iron ore, steel, copper, aluminium, power, oil and gas in India, South Africa and Namibia.
“The company benefits from ownership of low cost, cash rich zinc-lead-silver businesses. Zinc has a globally competitive unit production cost, led by its quality captive mines. We believe future growth is likely to be driven by volume uptick in key divisions. Aluminum, Zinc and cost efficiency in steel and aluminum operations. Besides, the expected dividend yield of ~15% (DPS of Rs 48) is another attraction,” Edelweiss said.
The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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