Vedanta (VEDL)

FairStock Score: 50/100 — MIXED

Score breakdown: P/E: 1/3 · ROCE: 2/2 · Growth: 2/2 · Dividend: 1/1

Key Financials

Strengths

• Reported ROE of 51.57% and ROCE of 25.26% indicate high returns on capital, though aided by leverage.
• Strong cash generation with free cash flow of ₹20,404 Cr and a dividend yield of 6.06%.
• Latest quarter net profit of ₹7,807 Cr on sales of ₹23,369 Cr shows healthy margins.
• Piotroski F-Score of 7/9 and promoter holding of 56.38% suggest financial discipline and aligned ownership.

Concerns

• At ₹735.60, the stock trades at P/E of 25.57 and P/B of 7.17, with Graham Number of ₹289.36 implying negative margin of safety.
• Sales growth is negative at -4.43%, while profit growth of 16% appears commodity-price driven rather than durable.
• High leverage with debt-to-equity of 2.12 and current ratio of only 0.70 raises liquidity risk.
• EV/EBITDA of 264.96 and Altman Z-Score of 2.04 point to stretched valuation and financial stress vulnerability.

AI Analysis

Let me look at Vedanta the way I'd look at any business. It's a diversified metals player, and in my world that means cyclical. The numbers tell a mixed story. On one hand, the company earns a reported ROE of 51.57% and ROCE of 25.26% - exceptional at face value. It generated ₹20,404 Cr of free cash flow and pays a 6.06% dividend. The latest quarter had net profit of ₹7,807 Cr on sales of ₹23,369 Cr, so margins are robust. Promoters own 56.38%, aligning interests. The Piotroski F-Score of 7/9 also suggests decent financial health. But I cannot ignore the price. At ₹735.60, the P/E is 25.57 and P/B is 7.17 against book value of ₹102.66. The Graham Number of ₹289.36 tells me there is negative margin of safety - in fact minus 148%. Sales fell 4.43% last year, and the company carries debt-to-equity of 2.12 with a current ratio of only 0.70. EV/EBITDA of 264.96 is absurd, though DCF says ₹2,793; DCF depends on future commodity prices and capex, and today's commodity profits may not persist. The Altman Z-Score of 2.04 is in the grey zone. Vedanta looks like a cyclical enjoying strong cash flows now, but I need to enter with a margin of safety. At this price, I'd rather wait. I need asset backing and earnings power that doesn't depend on favorable metal prices. Right now, the market is paying full price for today's boom. That's not my game.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer