Vedanta Aims for $10 Billion EBITDA with Ambitious Growth Projects
Vedanta Group has laid out an ambitious strategic roadmap to achieve a $10 billion EBITDA driven by a series of upcoming projects across its diversified business verticals. The plan, unveiled during recent site visits attended by over 45 investors, fund managers, and analysts, underscores Vedanta's commitment to significant expansion and profitability in the near term.
According to insiders present at the meetings, Vedanta is set to capitalize on its investments of approximately $8 billion in various growth initiatives. These investments are expected to yield substantial returns, with projections indicating $5 billion in free cash flows from the new projects alone.
Key highlights of Vedanta's growth strategy include the imminent commissioning of the world's largest alumina refinery at Lanjigarh. The expansion projects encompass a wide spectrum: enhancing capacity at the Lanjigarh alumina refinery from 3.5 to 5 MTPA, boosting the BALCO smelter capacity from 0.6 to 1 MTPA, increasing overall power generation capacity from 2.9 GW to 5 GW, and doubling the capacity of Gamsberg phase 2 from 250 to 500 KTPA, among others.
The projected $10 billion EBITDA is segmented across different business segments, with $4.2 billion anticipated from Aluminium, $2.7 billion from Zinc India (including Zinc and silver), and $0.9 billion from oil and gas operations, as per details shared during the presentations to fund managers.
Analysts have noted that Vedanta's strategic move to vertically split its businesses into five entities, slated for listing on stock exchanges by year-end, could unlock significant shareholder value. Under this plan, existing shareholders of Vedanta Limited will receive additional shares in the new entities: Aluminium, Power, Base Metals, Oil & Gas, and Steel and Ferrous, while Zinc and other current operations will remain under Vedanta's umbrella. The proposed demerger has received consent from the State Bank of India earlier this month.
"With commodities experiencing a robust upward trend, Vedanta is poised to capitalize on this boom", remarked an analyst familiar with the sector. Vedanta's shares have surged by 75% over the past three months, significantly outpacing the broader market benchmark Sensex, which rose by 68% over the same period.
Investors who visited Vedanta’s facilities at Barmer in Rajasthan, including the Cairn Oil & Gas assets, and the Zinc underground mines at Sindesar Khurd, expressed optimism about Vedanta's prospects. "Given the current high demand environment for commodities, Vedanta's projects are well-positioned to benefit from sustained economic growth", noted one investor.
Vedanta is aligning its growth trajectory with India's expected economic expansion, with GDP projected to reach $7 trillion by 2030. This strategic alignment underscores Vedanta's confidence in its ability to drive substantial value creation through focused operational excellence and strategic investments in critical sectors.
