Rs 78 to Rs 408: This diversified natural resource company has surged over 400% in two years!

Rs 78 to Rs 408: This diversified natural resource company has surged over 400% in two years!

by 5paisa Research Team Last Updated: May 03, 2022 - 12:47 pm 29.2k Views
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These returns are 4.2 times the returns delivered by the S&P BSE 500 index, of which the company is a part.

Vedanta Ltd has turned into a multibagger by delivering exceptional returns to its shareholders in the last two years. During this period, the company’s share price appreciated by 417%, jumping from Rs 78.95 on 5 May 2020 to Rs 408.40 on 2 May 2022. An investment of Rs 1 lakh in this stock last year would have turned to Rs 5.17 lakh today. 

Vedanta Limited, an S&P BSE 100 company, is a subsidiary of Vedanta Resources Limited. The company is one of the world’s leading Oil & Gas and Metals company with significant operations in Oil & Gas, Zinc, Lead, Silver, Copper, Iron Ore, Steel, and Aluminium & Power across India, South Africa and Namibia.

A month ago, the company announced the signing of a Power Delivery Agreement (PDA) with special purpose vehicles (SPVs) i.e., affiliates of Sterlite Power Technologies Pvt Ltd, a company engaged in business to supply hybrid‐based power with solar, wind and storage solutions.

This move was aligned with the company’s ESG vision of "Transforming for Good". The company intends to partially replace existing captive thermal power capacities with Renewable Energy for smelting and associated operations and meet power requirements of capacity expansion at Vedanta Aluminium Limited‐ Jharsuguda, Balco and Hindustan Zinc.

The overall arrangement is to procure 580 MW of renewable power where SPTPL and its affiliates are setting up a 1960 MW hybrid‐based renewable energy capacity to achieve this generation in a combination of Solar, Wind and Storage solutions. Once this power supply comes online, it has the potential to prevent about 2.7 million tons of GHG emissions from entering the atmosphere.

In the recent quarter Q4FY22, on a consolidated basis, the company’s net revenue surged by 41% YoY to Rs 39,342 crore. However, the bottom line decreased by 4.8% YoY to Rs 7,261 crore.

The company is currently trading at a TTM PE of 8.04x, as against the industry PE of 8.99x. In FY22, the company delivered an ROE & ROCE of 36.26% and 37.17%, respectively.

At the closing bell on Monday, the company’s shares were trading at Rs 407.95 on BSE. The stock has a 52-week high & low of Rs 440.75 and Rs 242.60 respectively on BSE.

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