Why is Vedanta share price skyrocketing? — explained

Vedanta shares: After ushering in the new year 2024, Vedanta share price remained in base-building mode till the middle of March 2024. However, after bottoming out at ₹250 apiece levels in mid-March, Vedanta share price has remained in an uptrend. Vedanta share price ended on Friday at around ₹385 apiece, which means the Vedanta share has risen to the tune of 50 percent since mid-March. Vedanta shares have been touching a 52-week high regularly. In the truncated week gone by, Vedanta share price touched a 52-week high in three out of four sessions. Vedanta shares failed to touch a 52-week high on Tuesday whereas the Indian stock market was closed on Wednesday for Ram Navami.

According to stock market experts, Vedanta shares are in an uptrend these days due to the global surge in commodity prices, particularly metals like aluminium and copper, which constitute its core business. They said that Vedanta share price has done well on the back of strong quarterly business updates from metal companies as well. However, they maintained that the debt level of the metal company will continue to remain a big concern for Vedanta Ltd.

Triggers for Vedanta share price

On reasons that are fueling Vedanta share price rally, Manish Chowdhury, Head of Research at StoxBox said, “The recent traction in Vedanta shares can be attributed to both sector-specific and company-specific factors. The overall metal sector pack has done well on the back of strong quarterly business updates from metal companies. Additionally, an improved outlook for the manufacturing sector in China and the US following robust manufacturing PMI data raised hopes of higher metal consumption by the world’s two largest economies. With an uptick in metal prices, especially copper and aluminium, we believe that earnings prospects of non-ferrous companies including Vedanta have improved.”

“Additionally, we feel that investors are becoming increasingly confident about the company’s efforts to improve its debt and cash profile through refinancing and capital raising activities. With a good dividend payout, a multi-metal exposure play, and favourable risk-reward vis-a-vis other players in the industry, we expect Vedanta to perform well going forward, especially considering its plan to split businesses with a sharpened strategy for segments including aluminium, copper, zinc, silver, oil & gas and semiconductor,” the StoxBox expert added.

Strong business outlook by metal, mining companies

Pointing towards the rising commodity prices, Amit Goel, Co-Founder & Chief Global Strategist at Pace 360 said, “Vedanta share price has been experiencing a significant upward trend recently. Being a major player in metals and mining, Vedanta is well-positioned to benefit from the global surge in commodity prices, particularly metals like aluminium and copper, which constitute its core business.

The Pace 360 expert went on to add that the current rally in Vedanta share price appears to be primarily driven by the positive outlook on the commodity market and internal developments such as increased production and capacity expansion. However, it’s crucial to consider the company’s ongoing debt situation and potential future revenue trends. The stock market is inherently volatile, and the current upswing might not be sustainable in the long run.

Developments regarding the fundamentals of Vedanta

“The company has seen positive internal developments, including increased aluminium production, capacity expansion, and receiving approval for fundraising, which could further enhance its prospects and lead to short-term price spikes. This uptick translates to potentially higher profits for the company, making it attractive to investors,” Aamit Goel of Pace 360 said.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.