1:6 Split Ahead Of Business: Metal Stock Vedanta Is Rs 64 Away From 52-Week High; Time To BUY Or SELL?

Metal giant, Vedanta stock witnessed a massive buying sentiment on August 19 as the billionaire Anil Agarwal-backed company completed its offer for sale (OFS) of its subsidiary Hindustan Zinc. Vedanta share price is currently a little over Rs 64 away from its 52-week high of Rs 506.85 apiece. YTD, the company's stock surged by 15% on BSE. There is room to buy or sell in Vedanta?

Vedanta Share Price:

Vedanta share price completed at Rs 442.55 apiece, up by 3.2% on BSE after market hours of August 19, with a market cap of Rs 1,73,054.22 crore. The stock was near its intraday high of Rs 444.35 apiece.

The stock's 52-week high and low is at Rs 506.85 apiece and Rs 207.85 apiece respectively. The stock's price-to-equity ratio is at 23.39x, while the return on equity is at 11.29%.

Vedanta Demerger:

One of the much-awaited developments in Vedanta is its demerger into six businesses, aka a 1:6 ratio. Vedanta has received approval for the demerger of 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.

As part of the demerger plan, for every share of Vedanta, shareholders will receive one share of each of the five newly listed companies. After the demerger, the businesses of Hindustan Zinc as well as the electronics business will remain with Vedanta Limited.

Vedanta Dividend:

Vedanta stock turned ex-dividend at the start of the current month, on August 2nd, for its second interim dividend payout of 400% worth Rs 4 per share for FY25. This is in addition to the first interim dividend of 1,100% or Rs 11 per share for which the stock turned ex-dividend in May 2024.

In FY24, Vedanta delivered a whopping 2,950% dividend worth Rs 29.5 per share. Currently, Vedanta has the highest dividend yield in the metal segment to the tune of 6.66%.

BUY Vedanta Stock?

Rudra Murthy BV, MD at Vachana Investments on August 19 told Business Today TV that Vedanta stock is ready for the next upward move. Support on the counter will be at Rs 410-415. The next expected target for Vedanta will be Rs 500 on a positional basis.

Earlier, Motilal Oswal reiterated a Neutral rating on Vedanta stock with a target price of Rs 460. Motilal said, "VEDL's performance in 1QFY25 came largely in line across segments. The capex plans are progressing well, which would lead to further cost savings."

Motilal added, "Management targets to clock USD10b of EBITDA, led by the upcoming capacity, which will produce higher VAP product. VEDL remains firm on its deleveraging plans, and higher cash flow going forward will support its expansion plan along with deleveraging."

In Q1FY25, the company posted profit after tax at Rs 5,095 crore, higher 124% QoQ and 54% YoY. While 1QFY25 consolidated revenue at Rs 35,239 crore, up 1% QoQ and 6% YoY driven by favourable market prices.

As of June 30, 2024, Vedanta's gross debt is at Rs 78,016 crore, while its net debt is at Rs 61,324 crore. Further, the net debt to EBITDA ratio improved to 1.5x vs. 1.9x YoY.