Shares of Vedanta Group's demerged entities witnessed significant declines on Thursday, with Vedanta Power leading the losses by falling 8% to Rs 44.82 on the BSE. Vedanta Oil & Gas also dropped 7% to Rs 41.34, while Vedanta Iron & Steel slipped 4% to Rs 40.84, ending a 13-session rally that saw the stock surge 113%. In contrast, Vedanta Aluminium Metal gained 2% to Rs 471, buoyed by positive market sentiment.
Vedanta Aluminium Metal, considered the group's crown jewel, has been highlighted by analysts as a strong performer. Emkay initiated coverage with a Buy rating and a target price of Rs 550, suggesting a 19% upside. The brokerage believes the market has not fully appreciated the stock's structural earnings potential, with a medium-term outlook remaining positive despite global market challenges.
Citi also initiated coverage on Vedanta Aluminium Metal last month, naming it the top pick in the Indian metals space with a target price of Rs 560 per share. Factors such as a favorable aluminium outlook, growth opportunities from BALCO expansion, and a stronger cost structure were cited as reasons for its bullish stance.
“We believe the market is yet to fully appreciate its structural earnings potential. We remain constructive on the medium-term aluminium outlook, with the global market likely to remain in deficit through CY28 despite Indonesia's announced capacity additions, given execution bottlenecks and China's effective 45 mt production cap.”
Emkay
Vedanta Iron & Steel has seen sharp gains, driven by Premji Invest's acquisition of shares worth Rs 102 crore. The company operates across India and Africa, focusing on iron ore exploration and high-quality steel production.
Vedanta Oil & Gas, housing Cairn Oil & Gas, aims to boost production significantly through a $5 billion investment. The company has grown its reserves and expanded its natural gas portfolio, though its shares saw a decline in the latest trading session.
Vedanta Power's valuation remains a topic of debate among brokerages, with estimates ranging from Rs 35 to Rs 60 per share. The company plans to expand its capacity to become one of India's top three private thermal power producers by FY33.
Background
The demerger of Vedanta Group entities has created a mixed outlook for investors. While Vedanta Aluminium Metal shows promise, the performance of other entities remains uncertain.
Investors will be keenly watching further developments and market reactions to the group's strategic plans.
