Vedanta targets $10 billion in EBITDA

14 Jun 2024 , 01:37 PM

Vedanta has said that the timely completion of more than 50 projects in a variety of business verticals will propel the group’s strategic plan, which aims to reach a $10 billion EBITDA soon. According to news reports, this roadmap was discussed during site visits this week that were attended by over 45 investors, fund managers, and analysts from top brokerages and fund houses. With these new initiatives, the group hopes to produce $5 billion in free cash flows.

Almost $8 billion has been invested by the Vedanta Group in its expansion initiatives. In Lanjigarh, the group will also put into service the biggest alumina refinery in the world. According to a presentation provided by the fund managers, the $10 billion near-term EBITDA is made up of $4.2 billion from aluminium, $2.7 billion from zinc and silver company Zinc India, and $0.9 billion from oil and gas.

Growth projects in progress include increasing the capacity of the BALCO smelter from 0.6 to 1 MTPA, the Lanjigarh alumina refinery from 3.5 to 5 MTPA, the Gamsberg phase 2 capacity from 250 to 500 KTPA, and the total power generation capacity from 2.9 GW to 5 GW.

According to the presentation, India’s Gross Domestic Product (GDP) is predicted to increase at a healthy rate and reach $7 trillion by 2030, placing the Group in a strong position to benefit from the country’s economic expansion.

By the end of this year, Vedanta hopes to float five entities on stock exchanges and propose a vertical split of the firms. According to the plan, current shareholders would also receive one share of each of the five recently listed businesses for every share of Vedanta Limited. Zinc and other current businesses will continue to be under Vedanta, but the demerger will form autonomous pure-play firms in the aluminium, power, base metals, oil and gas, and steel and ferrous industries. The State Bank of India approved Vedanta’s proposed demerger at the beginning of this month.

According to an analyst, “one can expect a sizeable growth in the business going forward, considering the metal’s relevance,” and Vedanta is well-positioned to profit from the current boom in commodities.

In the last three months, Vedanta shares have increased by 75%, greatly beating the Sensex by a margin of 68%.

Similar opinions were expressed by another investor who visited the Zinc underground mines at Sindesar Khurd and Vedanta’s onshore oil field at Barmer, which is a part of Cairn Oil & Gas. “These Vedanta projects stand to benefit as demand will remain strong on the back of the high economic growth that we are witnessing,” he said, citing the multi-year highs in commodities.

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