Metals and mining major Vedanta was down almost 12% in the early hours of the trading session on Monday. It was trading at its new 52-week low of ₹ 232 per share as of 11:45 IST.
The stock is down more than 34% year to date against an almost 20% decline in the benchmark NIFTY Metals index. The index shed 218 points or -4.61% and was trading at 4507 points.
Anil Agarwal-led Vedanta Ltd. is a subsidiary of Vedanta Resources Limited. It is a leading global oil & gas, power and metals company with significant operations across India, South Africa and Namibia. The company leads aluminium production in India with a 40% market share in the industry. Apart from this, the company has significant interests in zinc, copper and iron ore.
The natural resources stock presently offers a whopping 19.30% dividend yield. It also trades very close to its book value of ₹ 222 per share.
Recently the government imposed an export duty of 11% on iron and steel intermediates and key steel products. Further, it levied an export duty of 15% on all the major steel products. But to decrease the production cost of domestic steel products, import duties on coking coal, anthracite, coke, and ferronickel were lowered. However, analysts expect the benefits to be small in comparison to the steep hike in export duty.
Most metal stocks have corrected almost between 25-50% from their 52-week highs in response to falling demand, weak international prices and rising coal prices. India is a steel surplus nation with the government supporting companies to export capacities.
Centrum Broking has given a buy rating on Vedanta with a target price of ₹ 507 per share. This results in an upside of 119% with a time horizon of 1 year.
Analysts at JP Morgan have maintained an overweight rating on the company with a target price of ₹ 490 per share, indicating an upside of 111%.
Written By – Vikalp Mishra
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