Putting in big long term targets is in fancy and Vedanta is not the one to be left behind.
Addressing shareholders at the company’s 57th AGM, Anil Agarwal, the chairman has set the target of $100 bn, i.e., approx Rs 8 lakh crore revenues by 2030.
Company reported revenues of Rs 1.33 lakh crore in FY 22 and hence the target means 6x in 8 years = CAGR of 25%.
The target looks ambitious if one looks Vedanta’s historical trend.
- From FY 14 to FY 21, revenues grew at a CAGR of 4%. Even, excluding the Covid impact, revenues had grown by about 6.8% from FY 14 to FY 19.
- In FY 22, due to the commodity upcycle, the reported revenues grew by 50% taking the long term CAGR between FY 14 to FY 22 to 9.1%.
How does the Company plan to achieve such high growth rates?
- Aggressive expansion – old and new areas.
- The Chairman pointed to the acquisition of Goa-based Nicomet (in December 2021), which has made Vedanta the only producer of nickel in India.
- Company is foraying into semiconductors through a JV with Foxconn.
- Company also has significant plans to expand in renewable energy.
Vedanta has planned a capital expenditure of around $3 billion over the next two years for growth and vertical integration. Of this, $2 billion would be spent in current FY 23.
Is it exciting?
Every large vision looks exciting especially during upcycle in commodities.
If India grows by 10% for next 8 years, lot of long term visions will be achieved. If not, many of these visions would remain visions.
To me, this is neither a sector nor the company that I would invest into.
I have much cleaner, less volatile plays to leverage upon the India story !