Over 50 high-impact growth projects to power Vedanta’s plan to achieve USD 10 bn EBITDA – EQ
In Short : Vedanta is pursuing over 50 high-impact growth projects to achieve its target of USD 10 billion EBITDA. These initiatives focus on expanding capacity, optimizing operations, and enhancing sustainable practices across various sectors.
In Detail : New Delhi : Mining conglomerate Vedanta Group’s strategic roadmap to a $10 billion near-term EBITDA will be powered by timely execution of over 50 high-impact growth projects, including those in zinc, aluminum, oil and gas and power businesses.
These projects are at an advanced stage of completion, according to a powerpoint presentation made to more than 45 fund managers and analysts, who were on a site visit organised by the Vedanta Group.
Vedanta’s aluminum business has projects underway to achieve 3.1 million tonnes per annum of integrated supply.
It sits in the first quartile of the global cost curve, with the cost of production at multi-year lows — $1,711 per tonne — with a 100 per cent vertically integrated supply chain. The business has a 2x strong demand outlook with India’s domestic market set to double every five years, it said.
Vedanta’s zinc business produces 1.2 million tonnes of zinc metal at the cost of $1,000 per tonne while silver volumes are at 800 million tonnes a year. The business has 75 per cent-plus market share in India’s primary zinc market and growth plan for 2 million tonnes is under development.
Similarly, Vedanta Group’s oil and gas business is focusing on expanding its resource base to 2 billion barrels of oil equivalent in the next three years, with a production target of 300,000 barrels of oil equivalent per day, more than double of current levels, the presentation said.
Additionally, the Vedanta Group has major projects under execution that include capacity expansion at the Lanjigarh alumina refinery from 3.5-5 million tonnes, BALCO smelter from 0.6-1 million tonnes, and raising the overall power generation capacity from 2.9 GW to 5 GW.
Together, the Vedanta Group is investing around $8 billion in its ongoing growth projects, the presentation said.
Several leading brokerage houses have taken note of this, upgrading their target price for the company.
Upgrading Vedanta’s price target to Rs 644, Nuvama in its report said, “We are raising FY25E/26E EBITDA by 5-6 per cent, factoring in operational efficiency, lower aluminium cost of production due to captive alumina and higher premiums for aluminium and zinc.
“Meanwhile, the approval by lenders shall allow for demerger of companies by end-FY25. We value Vedanta, ex-HZL at 6x FY26E EV/EBITDA (earlier 5.5x) and HZL at 7x FY26E EV/EBITDA, yielding a target price of Rs 644 (earlier Rs 542).”
Further, Investec upgraded the target price to Rs 473.
The $10 billion near-term EBITDA includes $4.2 billion from aluminium, $2.7 bn from Zinc India (zinc and silver), and $0.9 billion from oil and gas.
