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Rising Commodity Prices has placed Vedanta in a Favourable Position

Mining Conglomerate Vedanta Ltd. benefits from rising commodity prices and is placed in a favourable position in the market with this surge.

Vedanta Ltd. is an Indian Multinational Company headquartered in Mumbai, having its main operations in iron ore, gold and aluminium mines across Goa, Karnataka, Rajasthan and Odisha. The stock of Vedanta Ltd. has been in focus now as the company would benefit from the rising prices of commodities.

How Will Rise in Commodities Benefit Vedanta?

Rising commodity prices will benefit the mining conglomerate by increasing revenue and profitability. When prices for commodities like Silver, Copper or Iron Ore rise, companies like Vedanta can sell their products at higher prices and this will lead to an increase in revenue for them, which will thus increase the profits and margins.

As there has been a rise in prices of commodities, The Mining Conglomerate Vedanta Ltd. is looking itself in a favourable position, The company has performed well recently reporting an EBITDA of Rs.87600 crores in Q4 FY 2023-24, This was driven by lower cost of production in aluminium and zinc. Furthermore, The volumes for its aluminium business are set to improve ahead and the start of coal mines in FY 2025-26 will also lower its cost of production.

Street View on Vedanta Ltd.

Post its earnings note, analysts have said they believe that Vedanta is best placed to ride rising commodity prices as this rise will further improve cash flows. They also stated that commodity prices have legroom to improve from here driven by factors like China Stimulus and improved demand, This rise will give further support to the cash flows of the company and one can factor in 6% higher aluminium and 9% higher zinc prices, which raises the FY 25/26 EBITDA by 11% and 15% respectively.

Conclusion: The rising commodity prices would be a great benefit for Vedanta on both top-line and bottom-line frontiers. The company is also on the path to deleverage and demerger, The deleveraging and demerging plans look promising for the Company and the streets also reacted positively to the demerging plans last year. The stock is up by more than 75% from there and currently trades at Rs.408 a piece as of April 29, and with this rising commodity prices the earnings for the next quarter are expected to be strong on both top line as well as bottom line basis.

Disclaimer: This post has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.