These are verbatim excerpts of the interview.
Q: Let’s start with Anil Agarwal’s stock, Vedanta. You have seen it for the last couple of decades. I recall chatting with you about it more than 10 years ago. But what’s the current stance on it? Viceroy’s report is going hard at Vedanta. Vedanta says these are malicious reports — the timing of the report, as well, is a problem. What’s your take?A: The playbook for the short sellers is very clear: find companies with shades of grey and that are highly leveraged. Unfortunately for Viceroy, they are just two years late on this stock. Vedanta Resources has already delivered quite a bit — from around $9–10 billion to around $4.5–5 billion now, and now servicing that debt is not a challenge at all.
Number two is that Vedanta itself has gone through the whole exercise of demerging, and all the lenders have looked at individual entities — their leverage and whatever the liabilities are — and they have approved this. So, all the entities are self-sufficient. Otherwise, this kind of approval would not come from lenders.
Also Read: Vedanta Resources will ‘default’ in the near future, short-seller Viceroy says
I think the report raises some issues which were well known, but the boat has already sailed, and there is nothing left here to gain from short selling.
Q: When the co-founder of Viceroy joined us earlier today, I mentioned to him as well, maybe two or three years back, this report would hold some ground. But actually, going by the action we have seen on Vedanta Ltd, in terms of deleveraging, Vedanta Resources is also cutting the debt by half, it appears a bit late in the game. But they stick to their guns that Vedanta Resources will ultimately default. We’ll see how that goes. That said, what is the view on the stock? Around ₹440, would you advise buying into it because we have the demerger that’s in the works, and the stock trades, as we have been mentioning, at 4.5 to 5 times 2025-26 (FY26) earnings before interest, taxes, depreciation and amortisation (EBITDA).
A: I will leave that for the investors to figure out. But what we can say is that Vedanta’s stock is largely dependent on the aluminium outlook, and the aluminium outlook has been pretty strong and doesn’t look to be weakening anytime in the future.
They are also getting a little bit more backwards integration in the form of a bauxite mine, coal, and their captive alumina. So, things are looking better only for them. So, I do not think, fundamentally, there is any reason that performance would deteriorate. But valuation-wise, I will leave it for investors to judge.
Q: To complete that loop on Vedanta before moving on to other areas. Is there a trigger here for Vedanta? So many people, HNIs, everybody owns the stock. The value is there. But is there a tipping point which will sort of unleash gains here? The report has come now, as you said, two years late. I am saying people have believed and bought this over the last one and a half to two years — the stock, that is. I am saying, is there a point where it starts to do well and starts to give returns?
A: Vedanta has done phenomenally well in the last two to three years. Meaning, if you had asked me in 2021, I would not have been able to gauge this kind of turnaround that the management has been able to achieve, and things are only getting better from here.Also Read: Vedanta Group issues clarification on the Viceroy Research report — Here’s what they said
So, meaning that the inflexion point happened two years back, and now we are into a steady growth stage. So, I don’t think there is any inflexion point we are waiting for.
Q: My point is the stock is at ₹450. It was ₹450 in 2010 also. Now you can add all the dividends, etc. That is the real meat here. Is that what you are referring to? Of course. I mean, in terms of balance sheet, etc., there has been a lot of repair. You said $10 billion down to about $4–5 billion in debt. But I am talking about price appreciation, stock-wise.
A: What has changed is the aluminium outlook. Aluminium used to be a loss-making for them, and they were hardly producing anything. They were not integrated. And aluminium was trading at around $1,600–1,700 per tonne then. Now it is $2,600 per tonne — so that $1,000 has changed the whole situation for them.
They have such a large capacity, and they had all these issues with Lanjigarh, etc., they were not able to integrate, reduce the cost. But now those issues are getting resolved. So, we have come back to a point where things are looking stable and strong for them from a fundamental point of view. So, the inflexion has already happened. Re-rating has happened. Now, there is steady growth ahead.
Q: What about the ferrous pack? If you could tell us what your top pick is out there? April-June quarter of 2025 (Q1FY26) could be a little bit subdued, but the remainder of the year is expected to pick up, right, if we’re going to see a revival in construction, and we have that safeguard duty in place as well. So, what do you like about them?
A: The near-term outlook is okay for steel stocks because steel prices have gone up and raw material prices have gone down. So, there would be quarter-on-quarter margin expansion for steel companies by around ₹3,000 per tonne. So that is a big thing for them.
Also Read: Vedanta, HZL shares fall up to 8% after short-seller alleges ‘material discrepancies’ in financials
From a medium-term perspective, things are not very clear. It will depend on what China does. There are indications that they might cut production. But we have to wait and see because one can’t be really too sure about China’s policies. So, near term is strong, medium term is neutral at the moment for ferrous firms.
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