Vedanta’s Power, Aluminium, Oil & Gas, and Iron Shares Surge Up to 5%—Which Stock is Poised for Continued Growth?
Recent trading activity for the demerged entities of Vedanta has demonstrated a positive uptrend, with shares of Vedanta Aluminium, Vedanta Oil & Gas, Vedanta Iron and Steel, and Vedanta Power rising up to 5% over two consecutive sessions. Specifically, Vedanta Aluminium shares increased by 1.5% to a high of Rs 465, and Vedanta Oil & Gas reached its upper circuit limit of Rs 34.70. The same day, Vedanta Power surged over 3% to Rs 42.40, while Vedanta Iron and Steel saw a 5% increase, closing at Rs 26.80. This strong performance indicates a heightened investor optimism toward the new entities formed post-demerger.
The bullish sentiment surrounding Vedanta Aluminium is largely attributed to Citi’s recent initiation of coverage with a ‘Buy’ rating, targeting Rs 560 per share, which represents a potential upside of over 22% from its last close. Citi’s confidence stems from a favorable outlook for aluminium pricing, driven by expected supply deficits and heightened demand. Analysts project that a $100 fluctuation in aluminum prices can shift the company’s EBITDA by 4-5.5%, underlining the sensitivity of valuations to commodity price movements. Furthermore, the anticipated net cash position by FY28 enhances the attractiveness of Vedanta Aluminium as an investment opportunity.
In the case of Vedanta Oil & Gas, management aims for significant production growth, targeting an output of 300,000 to 500,000 barrels per day via a substantial $5 billion investment. This strategic focus, supported by previous accolades as a leading private sector player, positions the segment favorably within the competitive landscape. Valuations for Vedanta Power, meanwhile, are mixed among brokerages, with estimates ranging from Rs 35 to Rs 60 per share, reflecting varied perspectives on its growth potential and operational challenges. The company’s ambitious plans to hold a top-three position in India’s thermal power sector by FY33 further accentuate its long-term viability.
Finally, Vedanta Iron & Steel has experienced the most remarkable price growth, marking five consecutive sessions of gains. However, it faces higher execution risks and commodity volatility, leading analysts to view it as a more tactical investment. In contrast, Vedanta Aluminium is identified as a structural compounder exhibiting favorable operational leverage. Overall, while the demerger has presented diversified investment avenues, it is crucial for investors to consider underlying valuations and sector dynamics before making allocations.
Source: The Economic Times
(Expert Note: This report was prepared by the Wealthova team.)