BlackRock, ADIA increase stake in Vedanta amid strong rally

Major investors such as BlackRock, the Abu Dhabi Investment Authority (ADIA), and domestic mutual funds including ICICI Mutual Fund and Nippon India Mutual Fund are ramping up their investments in Vedanta by nearly 2 per cent, according to market participants.

Foreign institutional investors (FIIs) have also shown interest, increasing their stake by 1.2 per cent during the same period. The surge in Vedanta's share price, driven by demerger plans, debt reduction efforts, and rising metal prices, has fuelled bullish sentiments among both domestic and international funds.

This surge has seen Vedanta's stock price climb nearly 30 per cent since December, adding approximately $3 billion to its market capitalisation. The company's shares hit a 52-week high of Rs 322 on April 5, reflecting a more than 15 per cent increase in the last five trading sessions alone.

The uptrend in global metal prices, buoyed by strong industrial data from China indicating an expansion in manufacturing activity for the first time in six months, has further bolstered investor confidence. As China remains a significant consumer of metals, this positive economic data has contributed to the rally in metal stocks, including Vedanta.

Analysts expect strong financial performance from Vedanta, with EBITDA projections of nearly $5 billion for FY24 and ambitious targets of $6 billion in FY25, scaling up to $7-7.5 billion in subsequent years. The company's focus on deleveraging its debt by USD 3 billion over the next three years has been well-received by investors, with reassurances from Navin Agarwal, Vice Chairman of Vedanta Ltd, regarding the company's cash flow and debt management strategies.

Vedanta's planned demerger of its metals, power, aluminium, and oil and gas businesses aims to unlock potential value for shareholders. Following the demerger, six independent verticals will be created, offering shareholders increased diversification and potential for growth.

(With PTI inputs)