VEDL - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Investment Rating: 3.5

🪨 Fundamental Analysis of Vedanta Ltd (VEDL)

✅ Strengths

Exceptional Profitability

ROE: 38.5%, ROCE: 25.3% — top-tier returns, especially in capital-intensive sectors

EPS: ₹38.3, with Qtr Profit Var: +142% — strong earnings rebound

Attractive Valuation

P/E: 12.4 vs Industry PE: 42.6 — deeply undervalued

Book Value: ₹105 vs Price: ₹440 — ~4.2x book, reasonable for a resource major

High Dividend Yield: 9.90% — excellent for income-focused investors

Technical Support

Price near DMA 200: ₹437, RSI at 43.1 — neutral zone with potential upside

⚠️ Concerns

High Leverage

Debt-to-Equity: 2.22 — aggressive capital structure, risk in down cycles

Negative PEG Ratio: -1.21

Indicates uncertain or declining growth outlook despite earnings spike

FII Outflow: -0.55% — foreign investors reducing exposure

MACD: -1.79 — bearish momentum, short-term weakness

Volatility Risk

Commodity-linked earnings can swing sharply with global prices

📉 Ideal Entry Price Zone

Entry Zone: ₹410–₹430

Near DMA 200 and technical support

Offers strong yield and valuation comfort

🧭 Long-Term Investment Outlook

VEDL is a moderate-to-good candidate for long-term investment, especially for dividend seekers. Its profitability is stellar, but high debt and cyclical risks temper enthusiasm.

Holding Period: 2–3 years

Ideal for income generation and capital appreciation in commodity upcycles

Reassess if ROE drops below 25% or debt remains elevated

🚪 Exit Strategy (If Already Holding)

Partial Exit Zone: ₹500–₹520

Near recent highs and valuation ceiling

Full Exit

If ROE drops below 20% for 2+ quarters

If debt-to-equity remains above 2.5 without deleveraging

If price breaks below ₹400 and fails to recover

Reinvest: On dips near ₹410 if dividend policy and earnings remain strong

Would you like a comparison with other metal and mining giants like Hindalco, Tata Steel, or NMDC to assess sector resilience and alternatives?

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