The Vedanta Group is set to achieve a $10 billion near-term EBITDA through the timely execution of over 50 high-impact growth projects across its Zinc, Aluminum, Oil & Gas, and Power businesses. These projects are at an advanced stage of completion, according to a presentation made to more than 45 fund managers and analysts during a site visit organized by Vedanta Group. PTI has reviewed a copy of the presentation.
Vedanta’s aluminum business is on track to achieve approximately 3.1 MTPA of integrated supply. Positioned in the first quartile of the global cost curve, the production cost is at a multi-year low of $1711 per ton, supported by a 100% vertically integrated supply chain. The aluminum business is poised for significant growth, with India’s domestic market expected to double every five years.
In the Zinc sector, Vedanta currently produces 1.2 MTPA of zinc metal at a cost of $1,000 per ton, alongside silver volumes of 800 MTPA. Holding a 75%+ market share in India’s primary zinc market, Vedanta is developing plans to increase production to 2 MTPA.
Similarly, the Oil and Gas division aims to expand its resource base to over 2 billion barrels of oil equivalent (BBOE) in the next three years, targeting a production rate of 300 thousand barrels of oil equivalent per day (KBOEPD). Major ongoing projects include expanding the Lanjigarh alumina refinery from 3.5 to 5 MTPA, increasing the BALCO smelter capacity from 0.6 to 1 MTPA, and raising overall power generation capacity from 2.9 GW to 5 GW. Vedanta Group is investing around $8 billion in these growth projects.
Several leading brokerage houses have responded positively, upgrading their target prices for Vedanta. Nuvama, for instance, upgraded Vedanta’s price target to Rs 644, stating, “We are raising FY25E/26E EBITDA by 5%/6% factoring in operational efficiency, lower aluminum CoP due to captive alumina, and higher premiums for aluminum and zinc. The approval by lenders shall allow for the demerger of companies by end-FY25. We value VEDL ex-HZ at 6x FY26E EV/EBITDA (earlier 5.5x) and HZ at 7x FY26E EV/EBITDA, yielding a TP of INR644 (earlier INR542).”
Investec also upgraded its target price to Rs 473, while CLSA noted in its report that profitability improvement initiatives, such as major cost reductions through alumina refinery capacity expansion, higher power generation efficiency, and the commissioning of coal blocks and bauxite mines, will be key to a re-rating.
Vedanta’s existing assets and growth projects are expected to generate $5 billion in free cash flows, significantly contributing to nation-building through sustainable returns to stakeholders. The $10 billion near-term EBITDA projection includes $4.2 billion from Aluminum, $2.7 billion from Zinc India (Zinc and silver), and $0.9 billion from Oil and Gas.
The Group’s strategic plans position it to capitalize on India’s economic growth, with the country’s Gross Domestic Product (GDP) expected to reach $7 trillion by 2030, according to the Ministry of Finance’s economic review report.
Vedanta has proposed a vertical split of its businesses, planning to list five additional entities on the stock exchanges, subject to regulatory approvals, by the end of this year. According to the plan, for every share of Vedanta Limited, existing shareholders will receive one share of each of the five newly listed companies. The demerger will create independent pure-play companies in Aluminum, Power, Base Metals, Oil & Gas, and Steel and Ferrous, while Zinc and other existing businesses will remain under Vedanta Limited.
