Neutral Vedanta; target of Rs 250: Motilal Oswal

Moneycontrol • 3 days ago

Original source

Key Investment Pillars

  • Zinc India growth: Higher commodity prices, better volumes, and a stronger dollar drove revenue growth, with EBITDA margin expansion due to favorable metal prices and lower cost of production.
  • Deleveraging efforts: Vedanta Resources targets to reduce debt to USD3b over the next three years, supported by dividends from listed entities, brand fees, and operating cash flows.
  • Capacity expansion: Zinc International commissioned Gamsberg Phase-II, increasing total mine capacity, and the company targets to increase capacity from 145ktpa to 500ktpa in ferrochrome.
  • Decarbonization initiatives: Hindustan Zinc aims to increase renewable energy share to 35% in the coming quarters, supporting long-term sustainability.

Thesis Validation Checklist

  • Watch for: Steady EBITDA margin performance, progress in deleveraging efforts, successful capacity expansions, and growth in renewable energy share to validate the Neutral stance.
  • Monitor: Global commodity price trends, forex movements, and industry demand-supply dynamics to assess potential impact on Vedanta's performance.