Vedanta is making bold moves with an $8 billion capital-expenditure plan aimed at significantly boosting its operating profit. The strategic initiative, coupled with the appointment of new independent directors, signals a strong commitment to growth and operational efficiency.
With ambitious targets for its key segments and a spinoff on the horizon, Vedanta is positioning itself for a transformative year.
New Directors On Vedanta's Board
In a meeting on Monday, the board of directors approved the appointment of directors on the recommendation of the nomination and remuneration committee. This strategic move aims to bolster the company's leadership and governance structure.
Pallavi Joshi Bakhru has been appointed as an additional director, designated as an independent director, for two years from July 1.
Prasun Kumar Mukherjee has also been appointed as an additional director, designated as an independent director, for two years, effective Aug. 11.
The appointments are subject to the approval of the shareholders of the company.
Management's Growth Outlook
In its fourth-quarter fiscal 2024 commentary, Vedanta's management outlined a robust capital-expenditure plan of $8 billion. This is projected to generate an additional $3–4 billion in annual Ebitda, aiming for a total of $10 billion.
In the current fiscal, the company has earmarked $1.9 billion for capex — $0.4 billion for the oil and gas business, $0.4 billion for zinc expansion projects, $0.8 billion for aluminum and power, and the remainder for other initiatives.
Brokerage Views
Nuvama Institutional Equities maintains a 'buy' rating on Vedanta with a target price of Rs 644 apiece, suggesting a potential upside of 46.4% from the previous close. The brokerage cited the company's cost-reduction initiatives and value-addition strategies.
It anticipates the cost of production for zinc in the fiscal to remain around the March-quarter level of approximately $1,050 per tonne. Nuvama expects aluminium to surpass zinc profit by the next fiscal, with both segments contributing about 84% to the Ebitda next fiscal, up from 67% in fiscal 2024.
Hindustan Zinc is poised for future growth, potentially increasing its refined metal capacity from 1.12 million tons per annum to up to 2 MTPA and its silver capacity from 800 tonnes per annum to 1,500 tonnes per annum over the next five years.
Motilal Oswal maintains a 'neutral' rating on Vedanta with a target price of Rs 500 apiece, indicating a potential upside of 13.7% from the previous close. It acknowledged Vedanta's strong positioning and focus on structural cost rationalisation to drive earnings.
The capital expenditure plans are progressing well and are expected to drive the next level of growth, it said. Motilal Oswal also pointed out that the spinoff process is on track and is anticipated to be completed by the end of 2024.
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