Vedanta Group Aims for $10 Billion EBITDA with 50 Growth Projects

Mining conglomerate Vedanta Group has outlined a strategic roadmap to achieve a near-term EBITDA of $10 billion. This ambitious target will be driven by the timely execution of over 50 high-impact growth projects across its zinc, aluminum, oil and gas, and power businesses.

In a recent presentation to over 45 fund managers and analysts, Vedanta highlighted that these projects are at an advanced stage of completion. The company’s aluminum business is set to reach an annual integrated supply of 3.1 million tonnes. The production cost is currently at a multi-year low of $1,711 per tonne, benefiting from a 100% vertically integrated supply chain. Vedanta projects strong demand growth in India’s domestic market, expected to double every five years.

Vedanta's zinc business produces 1.2 million tonnes of zinc metal at a cost of $1,000 per tonne, with silver volumes at 800 tonnes annually. The company holds over 75% market share in India’s primary zinc market and is developing plans to increase zinc production to 2 million tonnes.

In the oil and gas sector, Vedanta is expanding its resource base to 2 billion barrels of oil equivalent over the next three years, aiming for a production target of 300,000 barrels of oil equivalent per day, more than double the current levels.

Major ongoing projects include capacity expansions at the Lanjigarh alumina refinery (from 3.5 to 5 million tonnes), BALCO smelter (from 0.6 to 1 million tonnes), and increasing overall power generation capacity from 2.9 GW to 5 GW. Vedanta is investing approximately $8 billion in these growth projects.

Several brokerage houses have upgraded their target prices for Vedanta, recognizing the company's growth potential. Nuvama upgraded the price target to Rs 644, factoring in operational efficiency and lower aluminum production costs due to captive alumina. Investec also raised the target price to Rs 473. CLSA highlighted profitability improvement initiatives like cost reductions through alumina refinery expansion and higher power generation efficiency as key factors for re-rating.

Vedanta's existing assets and growth projects are expected to generate $5 billion in free cash flow and contribute significantly to national development. The company's near-term EBITDA projection includes $4.2 billion from aluminum, $2.7 billion from Zinc India (zinc and silver), and $0.9 billion from oil and gas.

Vedanta is well-positioned to capitalize on India's economic growth, with the country's GDP expected to reach $7 trillion by 2030. The company plans to vertically split its businesses and list five additional entities on stock exchanges, subject to regulatory approvals, by the end of this year. Shareholders will receive one share of each newly listed company for every share of Vedanta Ltd.

The demerger will create independent pure-play companies in the aluminum, power, base metals, oil and gas, and steel and ferrous sectors, while zinc and other existing businesses will remain under Vedanta.