Shares of mining giant Vedanta Ltd hit a new all-time high, gaining 3% to reach ₹515.90 on Friday, September 27, 2024.
This marks a 15% rise over the last five days and brings the company’s overall performance in CY24 to a staggering 100% gain. Analysts are eyeing a target of ₹532, with key support at ₹487, indicating that the stock’s rally could continue.
What’s Driving Vedanta’s Rally?
The recent surge in Vedanta’s stock can be attributed to several key factors, including:
- China’s Economic Measures: China, the largest consumer of base metals globally, recently introduced economic policies, such as cutting the reverse repo rate, to spur its economy towards a growth target of 5%. This has driven up demand for base metals like aluminum, copper, and nickel.
- US Federal Reserve’s Rate Cuts: Aggressive interest rate cuts in the US have led to an uptick in industrial metal prices, creating a favorable market environment for metal companies like Vedanta.
With these global factors in play, the demand for base metals has surged, pushing Vedanta shares to record highs.
Key Technical Indicators
According to Sumeet Bagadia, Executive Director at Choice Broking:
- The Relative Strength Index (RSI) for Vedanta stands at 76.46, reflecting strong bullish momentum.
- Vedanta is comfortably trading above its 20-day, 50-day, and 200-day Exponential Moving Averages (EMA), further reinforcing the positive trend.
Bagadia suggests a target price of ₹532 for the short term, with a stop loss at ₹487 to manage risk effectively. Investors looking to ride the current rally should be cautious of the elevated RSI, which could signal short-term volatility.
Vedanta’s Performance in CY24: 100% Gain
Vedanta’s stock has doubled in 2024, delivering a 100% gain, a remarkable recovery following two consecutive years of underperformance. The current rally has sparked interest among both institutional and retail investors, with the company’s diversified revenue streams and strategic expansion plans serving as major growth catalysts.
5-Day Stock Performance:
| Date | Closing Price (₹) |
|---|---|
| September 27, 2024 | 515.90 |
| September 26, 2024 | 500.85 |
| September 25, 2024 | 489.00 |
| September 24, 2024 | 475.60 |
| September 23, 2024 | 449.50 |
Upcoming Events: Interim Dividend Announcement
Vedanta’s board is set to meet on October 8, 2024, to approve the fourth interim dividend for FY2024-25. The record date for the entitlement of shareholders is set for October 16, 2024. So far, Vedanta has approved a total dividend payout of ₹13,474 crore for FY24-25.
This is significant news for shareholders as Vedanta continues to reward investors through dividends, further solidifying its position as a lucrative investment option.
MUST READ: Vedanta board OKs interim dividend of Rs 20/sh
Expansion and Capex Plans
Vedanta has ambitious plans for growth, with a projected USD 8 billion in capital expenditure over the next few years. These plans span multiple sectors, including:
- Oil and Gas Production: Aiming to ramp up to 300,000 barrels per day.
- Iron Ore: The company expects its iron ore business in Liberia to yield approximately 30 million tonnes per year (mtpa).
Key Capex Projects:
- BALCO Expansion: Initially expected in 3QFY25, now projected for 4QFY25, with operations commencing in 1QFY26.
- Coal Mining Projects: The Radhikapur coal block received environmental clearance, with operations likely to start by 4QFY25. Similarly, the Kurloi coal mine and the Ghograpalli mine are expected to be fully operational by FY26.
These capex initiatives reflect Vedanta’s robust commitment to expanding its footprint across diverse sectors, ensuring long-term growth and profitability.
Renewable Energy and Sustainability Efforts
Vedanta is also making strides in the renewable energy sector. The company has started using energy from its RE-RTC (renewable energy round-the-clock) projects. Notably, Hindustan Zinc achieved an 8.5% renewable power share in the first quarter of FY25, demonstrating the company’s commitment to reducing its carbon footprint.
Financial Outlook: Targeting USD 10 Billion in EBITDA
Vedanta has set an ambitious target of delivering USD 10 billion in EBITDA in the near term. The contribution from various business segments is expected as follows:
- Aluminum Business: USD 4 billion
- Zinc India: USD 2.7 billion
- Oil and Gas: USD 1 billion
- Iron Ore, Steel, Power, and Others: The remaining portion
This diversified revenue stream is a testament to Vedanta’s strategic positioning and growth potential across multiple industries.
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Disclaimer
The information provided in this article is for informational purposes only and should not be considered as financial advice. Investors should conduct their own research or consult with a professional advisor before making any investment decisions.
