Vedanta Ltd
NSE:VEDL
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Intrinsic Value
The intrinsic value of one VEDL stock under the Base Case scenario is 537.36 INR. Compared to the current market price of 448.4 INR, Vedanta Ltd is Undervalued by 17%.
The Intrinsic Value is calculated as the average of DCF and Relative values:
Valuation Backtest
Vedanta Ltd
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Fundamental Analysis
Economic Moat
Vedanta Ltd
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Vedanta Ltd., a key player in India's natural resources sector, operates as a diversified global miner and manufacturer with a substantial focus on metals and mining. Founded in 1976, the company has since evolved into one of India's largest producers of zinc, lead, silver, and oil and gas, contributing significantly to the country's mineral wealth. Vedanta’s integrated business model combines mining operations with value addition through semi-finished and finished products, enhancing profitability while lowering costs. With its headquarters in Mumbai, the company leverages a diverse portfolio of operations across several states in India, as well as in Africa and Australia. This geographical...
Vedanta Ltd., a key player in India's natural resources sector, operates as a diversified global miner and manufacturer with a substantial focus on metals and mining. Founded in 1976, the company has since evolved into one of India's largest producers of zinc, lead, silver, and oil and gas, contributing significantly to the country's mineral wealth. Vedanta’s integrated business model combines mining operations with value addition through semi-finished and finished products, enhancing profitability while lowering costs. With its headquarters in Mumbai, the company leverages a diverse portfolio of operations across several states in India, as well as in Africa and Australia. This geographical diversity not only mitigates risks but also positions Vedanta advantageously to tap into the growing demand for essential raw materials in critical industries.
For investors, Vedanta Ltd. presents a compelling case due to its strong operational efficiencies, strategic asset acquisitions, and unwavering commitment to sustainability. The company's focus on leveraging advanced technology and renewable energy in its operations is part of its strategy to enhance operational resilience and reduce environmental impact. As governments worldwide move towards greener initiatives, Vedanta stands to benefit from increased demand for essential metals like copper and zinc for clean energy technologies. Additionally, with a robust pipeline of expansion projects and a solid dividend track record, Vedanta aims to deliver long-term value to its shareholders, making it an attractive investment option in the evolving global commodities market.
Vedanta Ltd. is a diversified natural resources company based in India, and it operates in various core business segments. Here are the primary segments:
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Metals and Mining:
- Zinc: Vedanta is one of the largest producers of zinc globally. The company's operations include mining, smelting, and refining processes.
- Copper: The company produces copper cathodes and rods. It has significant copper operations in India and is involved in the entire value chain, from mining to production.
- Aluminum: Vedanta produces aluminum and alumina. The operations encompass bauxite mining, alumina refining, and aluminum smelting.
- Iron Ore: The company has iron ore mining operations, primarily in Goa and Karnataka, contributing to its diverse metal portfolio.
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Oil and Gas:
- Vedanta operates in the upstream segment of the oil and gas sector, exploring and producing oil and natural gas. The company holds interests in oil fields across India and other regions.
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Power:
- Vedanta has a presence in the power sector through its subsidiaries. It focuses on energy generation from various sources, including thermal and renewable energy, ensuring a sustainable power supply for its operations.
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Infrastructure:
- Although not core to its main business, Vedanta is involved in infrastructure activities that support its operations, particularly in regions where it has mining interests.
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Copper and Other Metals:
- In addition to its primary segments, Vedanta also engages in the production and processing of other metals such as silver and lead, enhancing its overall portfolio in the metals industry.
The company's diversified operations help mitigate risk and foster growth across various sectors of the economy, positioning it as a significant player in the global natural resources market.
Vedanta Ltd, a leading diversified natural resources company in India, possesses several unique competitive advantages over its rivals. Here are some key factors:
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Diverse Resource Portfolio: Vedanta is involved in multiple sectors including zinc, lead, silver, copper, aluminum, iron ore, oil, and gas. This diversification reduces dependency on a single commodity and minimizes risk exposure.
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Vertical Integration: The company has a vertically integrated business model, particularly in its aluminum and copper segments. This allows for greater control over the supply chain, reduced costs, and improved profit margins.
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Strategic Location: Many of Vedanta's operations are located in resource-rich regions of India, giving them direct access to raw materials and minimizing transportation costs compared to rivals located further from resources.
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Strong Operational Efficiency: Vedanta has implemented advanced mining and processing techniques, which enhance operational efficiency and reduce production costs. This efficiency helps them to maximize profitability even in a fluctuating commodity price environment.
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Financial Strength: The company has a robust financial position, allowing it to invest in expansion projects, research, and technology innovations. Strong capital management gives Vedanta an edge in navigating market fluctuations and pursuing growth opportunities.
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Sustainability Focus: Vedanta has increased its focus on sustainable and ethical mining practices, which can resonate well with environmentally conscious investors and customers. This approach can offer a competitive advantage as sustainability becomes a more prominent criterion for stakeholders.
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Global Presence: Vedanta operates not only in India but also in several countries across Africa and Australia, enabling it to tap into different markets and reduce dependence on one geographic area.
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Strong Brand Recognition: As one of India’s largest natural resource companies, Vedanta enjoys considerable brand recognition and trust, which can attract investors and customers alike.
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Government Relations: Given its size and influence, Vedanta often has the ability to navigate regulatory environments more effectively than smaller competitors, which can be significant in industries such as mining that are heavily regulated.
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Research and Development: Continuous investment in R&D allows Vedanta to innovate and improve efficiency, which can lead to cost savings and new product development ahead of competitors.
In summary, Vedanta's competitive advantages stem from its diverse resource base, operational efficiencies, vertical integration, and strong financial and brand positioning, all of which contribute to its ability to operate effectively in a competitive landscape.
Vedanta Ltd, as a major mining and natural resources company, faces several risks and challenges in the near future:
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Regulatory Risks: The mining industry is heavily regulated. Changes in environmental regulations, land acquisition laws, and taxation policies can significantly impact operations and profitability. Regulatory approvals can be time-consuming, leading to project delays.
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Environmental Concerns: Growing concerns over environmental sustainability and responsible mining practices can lead to increased scrutiny from regulators and the public. Environmental issues can result in legal challenges, project delays, or additional costs for compliance.
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Market Volatility: Vedanta's revenues are largely dependent on commodity prices, which can be volatile due to global economic conditions, changes in supply and demand, and geopolitical tensions. Price fluctuations can impact profitability and investment decisions.
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Geopolitical Risks: Operations in multiple countries expose Vedanta to geopolitical risks, including changes in government, civil unrest, and international relations. Political instability can disrupt operations and affect profitability.
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Health and Safety Risks: The mining sector has inherent health and safety risks. Any accidents or disasters can result in loss of life, legal liabilities, and damage to the company's reputation.
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Financial Risks: Fluctuations in currency exchange rates, interest rates, and inflation can pose financial risks. Additionally, high levels of debt can affect financial health and limit flexibility in capital expenditures.
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Competition: The natural resources sector is competitive, with many players vying for market share. Increased competition can lead to price wars and reduced margins.
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Supply Chain Disruptions: Dependence on a complex supply chain for raw materials and equipment can expose Vedanta to risks of disruptions due to logistical issues, pandemics, or political tensions.
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Technological Changes: Rapid technological advancements may necessitate continuous investment in innovation and updates to maintain operational efficiency and environmental compliance.
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Public Perception and Activism: Public perception regarding the mining industry can affect operations. Activism related to land use, indigenous rights, and environmental protection can lead to protests, operational delays, and damage to reputation.
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COVID-19 Aftermath: The ongoing effects of the COVID-19 pandemic may continue to impact operations, labor availability, and consumer demand.
In summary, Vedanta Ltd must navigate a complex landscape of regulatory, environmental, financial, and market challenges while ensuring safe operations and maintaining its reputation in the industry. Strategic risk management will be essential for mitigating these challenges.
Revenue & Expenses Breakdown
Vedanta Ltd
Balance Sheet Decomposition
Vedanta Ltd
Current Assets | 519.2B |
Cash & Short-Term Investments | 279.7B |
Receivables | 70.2B |
Other Current Assets | 169.4B |
Non-Current Assets | 1.4T |
Long-Term Investments | 36.6B |
PP&E | 1.2T |
Intangibles | 48.1B |
Other Non-Current Assets | 133.7B |
Current Liabilities | 786.6B |
Accounts Payable | 101B |
Other Current Liabilities | 685.7B |
Non-Current Liabilities | 814.2B |
Long-Term Debt | 511.7B |
Other Non-Current Liabilities | 302.6B |
Earnings Waterfall
Vedanta Ltd
Revenue
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1.5T
INR
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Cost of Revenue
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-431.8B
INR
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Gross Profit
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1T
INR
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Operating Expenses
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-747.6B
INR
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Operating Income
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278.2B
INR
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Other Expenses
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-226.1B
INR
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Net Income
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52.1B
INR
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Free Cash Flow Analysis
Vedanta Ltd
INR | |
Free Cash Flow | INR |
In its most recent earnings call, Vedanta announced a record first-half EBITDA of INR 20,640 crores, reflecting a 46% year-over-year increase. The second quarter saw profit after tax soar by 230% to INR 4,467 crores. Strong operational performance was highlighted, with an EBITDA margin of 34%, a significant rise of 900 basis points. The company expects to sustain growth, projecting considerable contributions from upcoming projects. To enhance financial strength, Vedanta reduced net debt to INR 56,927 crores and aims for an annual EBITDA of over $650 million by the end of FY '25. Strategic investments in sustainable energy and cost optimization initiatives underscore its commitment to long-term value creation.
What is Earnings Call?
VEDL Profitability Score
Profitability Due Diligence
Vedanta Ltd's profitability score is 60/100. The higher the profitability score, the more profitable the company is.
Score
Vedanta Ltd's profitability score is 60/100. The higher the profitability score, the more profitable the company is.
VEDL Solvency Score
Solvency Due Diligence
Vedanta Ltd's solvency score is 34/100. The higher the solvency score, the more solvent the company is.
Score
Vedanta Ltd's solvency score is 34/100. The higher the solvency score, the more solvent the company is.
Wall St
Price Targets
VEDL Price Targets Summary
Vedanta Ltd
According to Wall Street analysts, the average 1-year price target for VEDL is 536.13 INR with a low forecast of 434.3 INR and a high forecast of 696.15 INR.
Dividends
Current shareholder yield for VEDL is .
Shareholder yield represents the total return a company provides to its shareholders, calculated as the sum of dividend yield, buyback yield, and debt paydown yield. What is shareholder yield?
Ownership
VEDL Insider Trading
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Profile
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Description
Vedanta Ltd. is a natural resource company, which engages in the exploration, extraction, and processing of minerals, oil, and gas properties. The company is headquartered in Panaji, Goa and currently employs 8,129 full-time employees. The firm produces aluminum, copper, zinc, lead, silver, iron ore, oil and gas, and commercial energy. The company operates through five reportable segments: oil and gas, aluminum, copper, iron ore and power. Its aluminum business includes a refinery and captive power plant at Lanjigarh and a smelter and captive power plants at Jharsuguda, both situated in the state of Odisha in Eastern India. Its power operations include a thermal coal-based commercial power facility of 600 megawatts (MW) at Jharsuguda. The company is also in the business of commercial power generation, steel manufacturing and port operations in India and manufacturing of glass substrates in South Korea and Taiwan. The company has operations in India, Zambia, Namibia and South Africa. Its subsidiaries include Cairn Energy Hydrocarbons Limited, Sesa Mining Corporation Limited, Copper Mines of Tasmania Pty Ltd and others.
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Employees
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The intrinsic value of one VEDL stock under the Base Case scenario is 537.36 INR.
Compared to the current market price of 448.4 INR, Vedanta Ltd is Undervalued by 17%.