Shares of Vedanta Ltd. experienced a notable rise of over 2% in early trading following an announcement that the company's authorized committee of directors approved the issuance of non-convertible debentures (NCDs) valued at up to ₹3,500 crore.
The board's decision sanctions the issuance of up to 350,000 units of unsecured, rated, listed, redeemable NCDs, each with a face value of ₹1,00,000. These debentures will be offered on a private placement basis, in one or more series, as part of the company's ordinary course of business.
Market Reaction and Analyst Insights
The news propelled Vedanta's stock to a high of ₹261.85 on the BSE, helping to trim its three-month losses. Despite recent declines, the scrip carries a 12-month consensus target of ₹367.40, indicating a potential upside of over 40%.
Several financial institutions have offered their perspectives on Vedanta's stock:
- JPMorgan: In a July note, JPMorgan highlighted that Vedanta's net debt had declined by 21% sequentially, with its net debt to EBITDA at a comfortable 0.3 times. The brokerage also projected profitability tailwinds, anticipating LME Zinc prices to remain above $3,600 per tonne. They adjusted their model, incorporating LME Zinc price assumptions of $3,450/$3,150 per tonne for FY27/28 and suggested a target price of ₹312 for the stock.
- Citi: Maintained a 'Sell' rating with a target of ₹235.
- Kotak Institutional Equities: Valued the stock at ₹305.
- CLSA and ICICI Securities: Both set a target price of ₹345.
The company's recent performance also showed strength, with its EBITDA doubling year-over-year in the June quarter, exceeding Bloomberg consensus by 7%. This was attributed to improved performance across its Zinc India, Zinc International, and FACOR operations.
Future Expansion Plans
Vedanta is actively pursuing several capacity expansion programs. These include a 250KT smelter capacity expansion for Zinc India and a 330KTPA FACOR smelter plant, both targeted for completion over FY28-29. These initiatives are expected to further bolster the company's operational capabilities and market position.