 "Vedanta")
Shares of Vedanta rose as much as 2.8 per cent on Friday after the Hong Kong-based brokerage CLSA in a report said there was scope for further re-rating for the stock. The optimism stems from the company’s plan to expand its alumina refinery capacity and cut costs.
During the brokerage’s visit to the Anil Agarwal group firm’s Jharsuguda smelter, the commodity major indicated it had the potential to more than double the operating profit from its aluminum business to $1,350 per tonne.
Vedanta also expects major cost reductions via alumina refinery capacity expansion, higher power generation efficiency, commissioning coal blocks and bauxite mines, and a smelting capacity increase.
“Execution of these profitability improvement initiatives will be key to a re-rating,” said CLSA equity analysts Indrajit Agarwal and Vikas Kumar Jain in a note. For FY24, Vedanta had reported an operating profit of $504/tonne on a volume of 2.4 million tonnes. The company expects a cost reduction of $150/tonne over the next 12-18 months. After hitting a high of Rs 452, shares of Vedanta last closed at Rs 447, up 1.6 per cent. So far this year, shares of the company have rallied over 70 per cent.
