Shares of Vedanta Ltd have gained 130% from their 52-week low in a year. The metal and mining stock slipped to a 52-week low of Rs 211.25 on October 26, 2023 on BSE. In the current session, Vedanta stock ended 0.59% lower at Rs 486.80 on BSE. In nearly a year, the benchmark Sensex has gained 23.18%. In the same duration, Nifty metal gained 41.54% or 2,859 points.
Market cap of the firm slipped to Rs 1.90 lakh crore. A total of 5.05 lakh shares of the firm changed hands amounting to a turnover of Rs 24.75 crore on BSE.
Vedanta shares have a one-year beta of 1.2, indicating high volatility during the period. In terms of technicals, the relative strength index (RSI) of Vedanta stands at 54.4, signaling the stock is trading neither in the overbought nor in the oversold territory.
The stock has gained 89.27% in 2024. In five years, the stock has risen 225%. The large cap stock is trading higher than the 30 day, 50 day, 100 day, 150 day, 200 day moving averages but lower than the 5 day, 10 day and 20 day moving averages.
Emkay Global has initiated coverage on the Vedanta stock with a buy call. The brokerage has assigned a price target of Rs 600 to the stock.
"We initiate coverage on Vedanta (VED) with BUY and blended TP of Rs600/share, implying upside potential of 21% to the stock price and dividend yield of 9%, which takes the expected total return to 30%.
Our investment case on Vedanta is premised on 4 Ds:
1) Demerger – The group is in the final stages of a demerger process, which would split the group into 6 pure-play verticals. Our experience suggests that pure-plays trade at a premium to diversified miners.
2) (Project) Delivery – Vedanta is moving toward project completions and bringing them onstream in the next 12-18 months.
3) Dividends – Vedanta has been a significant value creator for investors, delivering a total shareholder return of 18.5%.
4) Deleveraging – Should Vedanta deliver well on the first 2 Ds, balance sheet concerns should ease at the company level as well as at parent VRL.
Pravesh Gour, Senior Technical Analyst at Swastika Investmart sees resistance for the stock at Rs 520-555. Support for the stock lies at Rs 471.
"The metal sector has recently witnessed bullish momentum, with Vedanta being a stronger counter among its peers. The stock has recently retested its breakout level, forming a pinbar candle. If the market experiences a bounce back, VEDL could outperform. From a technical perspective, the first resistance level is at Rs 520, above that, a rally could push the stock further toward the Rs 555 level. On the downside, a crucial support level is at 471, where the 20 DMA is located," said Gour. Another brokerage ICICI Securities has assigned a 'Buy' rating and a price target of Rs 600 to the Vedanta stock. Vedanta is weaving its growth story around two ‘Vs’ and one ‘C’ i.e. volume, value, and cost reduction–across segments, especially in its aluminium and Zinc-India divisions, said ICICI Securities.
The forthcoming demerger is likely to pave a separate sharpened growth path to individual divisions and offers investors an opportunity to invest in growth-oriented pure-play companies, it said. The distribution of standalone debt among different divisions, in particular aluminium, is likely to be closely tracked, ICICI Securities said.
Vedanta has significant volume growth aspirations for all divisions, ICICI Securities said adding that aluminium and Zinc India are potentially key earnings growth drivers.
"Oil & gas (O&G) production is likely to bottom up by FY26E. Growth vectors at Vedanta may help pare debt by $3 billion over the next three years. Dividend yield could sustain at over 5 per cent p.a. Put together, we envisage an Ebitda CAGR of 25 per cent YoY through FY26E and RoE of 40–45 per cent over the next two years," said ICICI Securities.