At a Glance:
Vedanta Ltd, India’s mining and natural resources giant, has been on a rollercoaster. From gushing cash flows to promoter pledging frenzy, and from aluminium dominance to potential demergers and delisting drama — it’s the quintessential Anil Agarwal soap opera. Stock’s up 33% in 5 years, but is the ride worth the risk?
1. 📦 Business Model: From Earth to Air (Literally)
Vedanta isn’t a company — it’s a commodity buffet:
- 🪙 Zinc & Silver via Hindustan Zinc
- 🧱 Aluminium via BALCO & Jharsuguda
- 🛢️ Oil & Gas via Cairn India
- 🪨 Iron Ore, Steel, Power, Glass substrates, and even ports
It’s like if Adani and ONGC had a baby and handed it to a hedge fund.
India = 65% of revenue
Foreign markets = 35% (Malaysia, UAE, China)
2. 📈 5-Year Financial Snapshot (FY21–FY25)
| Metric | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| Revenue (₹ Cr) | 88,021 | 1,32,732 | 1,47,308 | 1,43,727 | 1,52,968 |
| Net Profit (₹ Cr) | 15,032 | 23,710 | 14,503 | 7,539 | 20,535 |
| Operating Margin | 31% | 34% | 23% | 25% | 28% |
| Dividend Yield | ~7.5% | ~9% | ~11% | ~10% | 9.9% |
| EPS (₹) | 31.21 | 50.58 | 28.45 | 11.40 | 38.33 |
| Debt (₹ Cr) | 57,669 | 53,583 | 80,329 | 87,706 | 75,186 |
| Promoter Holding | 65%+ | 68% | 63.71% | 56.38% | 56.38% |
👉 Short story: Profit = volatile. Debt = persistent. Dividends = generous. Promoter confidence = decreasing.
3. 🧨 What’s Going Wrong?
- 100% promoter pledge – yes, all of it.
- Debt across multiple entities – thanks to Vedanta Resources Ltd (UK), a perpetual borrower.
- Aggressive dividend payouts – not from surplus but to service debt.
- Failed delisting in 2020 – public shareholders said “nah bro.”
- Rumoured demerger/delist again in FY25? – Anil ji never quits.
Oh, and FIIs are not thrilled:
- 📉 FII holding up only 3% in 5 years.
- 📉 Retail now holds 16%+ — retail hai toh possible hai.
4. 🏭 Segment-wise Highlights (FY25)
| Segment | Contribution to Revenue | Notes |
|---|---|---|
| Aluminium | 38% | Largest domestic player, 2.4 MnT smelter |
| Zinc | 28% | Cash cow via HZL |
| Oil & Gas | 12% | Volatile due to crude prices |
| Iron & Steel | 8% | Still building scale |
| Others | 14% | Power, Port Ops, Display Glass etc |
Aluminium and Zinc are the core — everything else is Anil bhai’s wishlist.
5. 🧮 Valuation: Do the Numbers Work?
- Current Price: ₹440
- TTM EPS: ₹38.33
- P/E: 11.5x
- Dividend Yield: 9.9%
- Book Value: ₹105 → P/B = 4.2x (high for a metal stock)
- ROE: 39% (but driven by high debt)
📌 Fair Value Calculation
Let’s not be drunk on dividends and do a sober P/E + DCF blend:
- EV/EBITDA median for global peers = ~4.5x
- Vedanta’s FY25 EBITDA = ₹42,343 Cr
- Net Debt = ₹75,186 Cr
- Enterprise Value = 4.5 × 42,343 = ₹1.90 lakh Cr
- Implied Equity Value = ₹1.90L – ₹0.75L = ₹1.15L Cr
- Shares = ~391 Cr
- Fair Value = ₹294 (base case)
💸 With optimism baked in (assuming 10% EBITDA growth), FV could stretch to ₹370–380.
🎯 EduInvesting FV Range: ₹290–₹380
6. 🎭 Promoter Drama & Restructuring Rumors
- 2020: Tried delisting — failed.
- 2023: Said “no more dividends” — then paid more.
- 2025: Rumors of spinning off business units into separate IPOs (HZL already listed).
- Bonus, Buybacks, Buzzwords – but retail holding just keeps rising…
Anil Agarwal = the Ekta Kapoor of capital markets.
7. 🧠 TL;DR – Vedanta in One Sip
- ✅ Plays every commodity in the book
- ✅ Dividend monster (₹>45/share FY25)
- ❌ 100% promoter pledge = red flag
- ❌ Debt still weighs down value
- ❌ Earnings volatility makes it hard to model
📦 Great business mix. Shaky capital structure.
🎯 Final Verdict
Vedanta is that friend who throws the best parties (dividends), but always forgets his wallet (debt). If you’re okay with risk and love cash flows — sure, worth watching.
But if you want sleep at night, stick to HZL or Nalco instead.
Tags: Vedanta Ltd, Anil Agarwal, Dividend Stocks, Promoter Pledge, Hindustan Zinc, Aluminium Stocks, PSU vs Private, India Metals, EduInvesting
✍️ Written by Prashant | 📅 20 June 2025
