Vedanta - Well Positioned To Capture Domestic Growth Story With Strong Product Portfolio: Motilal Oswal

Motilal Oswal Report

Though the global commodity landscape is witnessing multiple headwinds, India is outshining the global peers. Domestic demand continues to remain robust, driven by higher demand and Vedanta Ltd. being the largest natural resources company in India with a diversified portfolio of low cost – long life assets is expected to benefit from this growth story.

We believe that despite Vedanta undertaking multiple capex to expand its capacities across verticals, this will continue to exert pressure on the company’s cash flows.

We believe, the recent LM, which resulted in elevated cost of borrowings would reduce HoldCo’s flexibility to deleverage going forward, and hence, HoldCo. would have to further rely on Vedanta’s dividend payout, which would further exert pressure on the company.

We believe that until the debt repayment overhang at HoldCo is resolved, debt overhang at Vedanta and Hindustan Zinc Ltd. will continue to loom. 

Vedanta is currently trading at 6.3 times FY26E enterprise value/Ebitda multiple and 3.8 times FY26E price/book multiple and we believe the stock is adequately priced in.

We reiterate our Neutral rating on the stock with our SOTP-based target price of Rs 270.

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