Anil Agarwal-backed Vedanta Ltd's share price surged nearly 2% to cross the Rs 400 mark on Wednesday after the company acquired blocks in OALP Round-IX. With this move, Vedanta has geared up for rapid expansion on the West Coast of India. After this big deal, upcoming focus areas are Q4 results and demerger updates in Vedanta.
Vedanta Share Price:
After market hours of April 16, Vedanta stock jumped by nearly 1% to end at Rs 398.55 apiece on BSE, with a market cap of Rs 1,55,848.52 crore. The stock grew as much as 1.7% to hit an intraday high of Rs 402.20 apiece during Wednesday's session. The stock's 52-week high and low is at Rs 527 apiece and Rs 362.20 apiece respectively.
Vedanta 7 New Blocks In OALP Round-IX:
Cairn Oil & Gas, a company of Vedanta Group, acquired 7 new blocks in the Open Acreage Licensing Policy (OALP) Round IX auction. The new blocks include 4 onshore and 3 shallow water blocks located in the hydrocarbon basins of Cambay, Saurashtra, and Mumbai. With these additions, Cairn's portfolio now expands to 69 blocks covering over 73,000 sq.km. Area across the country.
As per the main statement, Cairn is the largest private player acquiring 7 out of the 28 blocks auctioned in OALP Round IX, strengthening its portfolio, in line with the vision to contribute 50% of domestic crude production in India.
Anil Agarwal, Chairman, of Vedanta Group, said, "I congratulate Minister Hardeep Singh Puri for a successful auction. Today, India's policies for the hydrocarbons sector are the most attractive in the world. They offer tremendous opportunity and returns on capital."
Cairn has been an active participant in OALP auctions over the past years, to secure more oil and gas blocks to expand its exploration and production capacity.
So far, Cairn has acquired 36 blocks in OALP Round-I, 5 blocks in OALP Round-II, and 3 in OALP Round-III, in addition to its recent acquisition of 7 blocks in OALP-IX, underscoring its continued commitment to unlocking India's hydrocarbon potential. The company holds 100% participatory interest in all OALP blocks. Additionally, Cairn holds legacy blocks awarded under NELP and pre-NELP regimes, as per the statement.
Vedanta Demerger:
Earlier, this year, Vedanta received shareholders' approval for a scheme of arrangement between Vedanta Limited (Demerged Company or Company) Vedanta Aluminium Metal Limited (Resulting Company 1) Talwandi Sabo Power Limited (Resulting Company 2) and Malco Energy Limited (Resulting Company 3) Vedanta Iron and Steel Limited (Resulting Company 4) and their respective shareholders and creditors under Sections 230-232 and other applicable provisions of the Companies Act, 2013 (Scheme).
The demerger is of Vedanta and metals, power, aluminium, and oil and gas businesses to unlock potential value. After the exercise, six independent verticals - Vedanta Aluminium, Vedanta Oil & Gas, Vedanta Power, Vedanta Steel and Ferrous Materials, Vedanta Base Metals and Vedanta Limited - will be created.
Under the demerger agreement, every eligible shareholder of Vedanta will get one share each in the five newly listed companies, against their 1 existing share in Vedanta.
BUY Vedanta Stock?
As per Trendlyne data, the consensus recommendation from 15 analysts for Vedanta Ltd. is BUY. EPS is expected to grow by 211.1% in FY25. The average 1-year target price is set at Rs 524.87 apiece, hinting at a nearly 32% upside ahead.
However, recently, brokerage Geojit recommended HOLD Vedanta stock for a target of Rs 496.
Geojit said, "Vedanta's leadership is confident that it will post a record-breaking annual EBITDA in this fiscal, fueled by a strong lineup of projects and strategic investments despite facing challenges in oil and gas production. To maintain profitability, the company is prioritising cost-cutting measures, which have already led to substantial decreases in production expenses. However, higher input costs and the underperformance of the oil and gas segment, due to lower volumes and higher operating expenses, were notable drawbacks. Additionally, a slowdown and uncertainty in the global market may negatively impact its international business in the future. Therefore, we cautiously downgrade our rating to 'HOLD' on the stock, with a rolled-forward target price of Rs. 496, based on 5.0x FY27E EV/EBITDA."
For Q4FY25, Kotak Institutional Equities on Vedanta said, "We forecast a 3% qoq decrease in EBITDA (+23% yoy) due to higher costs in the aluminum segment and mixed trends in commodity prices." Adding it said, "We forecast (1) the aluminum EBITDA to decrease 5% qoq (+44% yoy), primarily due to higher input costs, (2) the oil and gas division to witness EBITDA decline of 3.2% qoq on lower volumes and (3) the Zinc India division to be stable qoq (+25% yoy), with higher volumes offset by lower zinc prices." However, this brokerage has suggested REDUCE on Vedanta stock for a target price of Rs 465.
Disclaimer: The write-up is just for information purposes, and is not a recommendation to buy, sell or hold. We have not done fundamental or technical analysis and have no opinion on article mentioned. Neither, the author nor Greynium Information Technologies should be held liable for any losses. Please consult a professional advisor.
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