INSUBCONTINENT EXCLUSIVE:
Metal major Vedanta, one of the top 10 dividend-yielding stocks, has seen its share price struggle on Dalal Street over the past year
Despite offering a healthy 12-month dividend yield of 7%, the large-cap stock has declined 2% in the same period
This raises a crucial question if investors should consider buying it purely for its attractive dividend, despite its uninspiring stock
performance.Stock's dividend yield in FY24, FY23 and FY22 stood at 7%, 24.2% and 10.7%, respectively according to a note by SBI
Securities.Kranthi Bathini, Director-Equity Strategy at WealthMills Securities said that Vedanta shares draw their popularity among
investors from high dividend yield
He attributed the current underperformance to the demerger overhang while highlighting that the company has suffered corporate governance
issues in the past.His advice to investors is to wait till the time the demerger is completed.Echoing similar sentiments, Sunny Agrawal,
Head - Retail Fundamental Desk at SBI Securities told ETMarkets to buy the stock only when the demerger takes place as it will unlock value
for the shareholders.
Live EventsTechnical analyst Nilesh Jain also does not find Vedanta's current proposition attractive on charts
In the absence of any clear trend, it is best to avoid the stock for now, the Head Vice President, Equity Research Technical and Derivatives
at Centrum Broking opined.However, brokerage firm Emkay takes a contra view on Vedanta stock as it recommends a 'Buy' view on the counter
for a price target of Rs 525
The reason for its optimism is Hindustan Zinc (HZL), a key profit driver for Vedanta
The company plans to double its capacity to 2mt by the end of the decade from 1.1mt currently and the first step includes a 250kt zinc
smelting expansion at Debari with Rs120bn capex, targeting completion in 36 months.Vaibhav Vidwani, Research Analyst at Bonanz's Vidwani has
also recommended a 'Buy' on Vedanta riding on the prospects of HZL
The profitability will be supported by the price of silver (Hindustan Zinc) and aluminium, while the company's core business remains solid,
"Expansion in both upstream and downstream in the aluminium industry, the Sijimali bauxite mine and backward integration for the aluminium
smelter will support revenue growth in the upcoming year," he added.Also read: IT stocks hit decade-high 3.2% dividend yield as FIIs flee
Should you buy TCS, Infosys, Wipro before Q1 results?Vedanta shares have delivered modest returns of 2% so far in 2025, underperforming the
Nifty, which is up 7.2% year-to-date and 4.7% over the past 12 months
prices have not moved despite the merger news
In March, Vedanta extended the deadline of the demerger of its businesses from March 31, 2025, to September 30, 2025, citing pending
approvals from government authorities and the National Company Law Tribunal (NCLT)
The mining conglomerate is looking to demerge its businesses - aluminium, oil & gas, power and steel- as separate entities
At present, these businesses are subsumed within Vedanta Ltd, which is an Indian arm of UK-based Vedanta Resources
There will be no change in the overall shareholding structure.Chairman Anil Agarwal in a letter to company shareholders had said that he
envisions each of the four newly demerged companies to potentially grow into a $100 billion company
Post the demerger, every Vedanta shareholder - both retail and institutional - will receive one new share in each of the newly demerged
companies.Metal major Vedanta posted strong operational performance in Q1FY26 across its portfolio
The Lanjigarh Refinery reported a record quarterly alumina production of 587 kt, marking a 9% year-on-year and a 36% quarter-on-quarter jump
The mining major had reported stellar Q4FY25 earnings posting a 154% year-on-year rise in consolidated net profit to Rs 3,483 crore while
the revenue from operations grew 14% YoY to Rs 40,455 crore.Also read: Titan shares give Rs 900 crore shock to Jhunjhunwalas
filing had said that Vedanta's balance sheet deleveraged by $500 million in Q4 with a closing net Debt of $6.2 billion, enabling substantial
improvement in leverage to 1.2x.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own
These do not represent the views of Economic Times)
