Vedanta Ltd.
ISIN: INE205A01025 • Market Cap: ₹1.03 Lakh Cr
The 5-Pillar Quality Audit for Vedanta Ltd.
Evaluated across Profitability, Financial Health, Historical Compounding, Valuation Safety, and Ownership Governance:
1. Profitability & Capital Efficiency
Weight: 25%Measures operating margins (30.6%), Return on Capital Employed (10.1%), and equity compounding (35.0%).
2. Financial Health & Solvency
Weight: 25%Debt-to-Equity is 0.65 with comfortable interest coverage and clean working capital.
3. Growth & Compounding Track Record
Weight: 20%Historical 3Y Sales CAGR (-8.0%) and 3Y PAT CAGR (88.9%).
4. Valuation Multiple & Margin of Safety
Weight: 15%Trades at P/E of 5.21 vs PEG of 0.46 and Dividend Yield of 13.0%.
5. Ownership Quality & Governance
Weight: 15%Promoter holding stands at 54.7%, backed by 26.7% institutional ownership.
Key Fundamental Strengths
Robust Equity Compounding (ROE: 35.0%)
Shareholder equity compounds at a healthy 35.0%, exceeding average Indian equity benchmarks.
High-Velocity Profit Compounding (3Y PAT CAGR: 88.9%)
Net earnings have compounded at 88.9% annualized, demonstrating operating leverage.
Attractive Valuation Margin (P/E: 5.21)
Trading at a P/E multiple of 5.21, the stock offers a favourable risk-reward entry for quality compounding.
Deep Institutional Sponsorship (26.7%)
Mutual funds, domestic DIIs, and foreign FIIs hold 26.7%, providing strong governance scrutiny.
Areas to Watch & Potential Risks
Subdued Capital Efficiency (ROCE: 10.1%)
A sub-12% ROCE suggests return on capital barely exceeds the company's weighted average cost of capital (WACC).
Topline Stagnation (3Y Sales CAGR: -8.0%)
Revenue growth has slowed below inflation rates, indicating cyclical demand slowdown or saturated core markets.
Quantitative Strategy Eligibility
Checking VEDL against established Indian wealth creation frameworks:
Coffee Can Investing Framework
Fails 10%+ revenue growth or 15%+ minimum capital return benchmark over historical periods.
Quality Factor Screener (High RoIC + Low Debt)
Scorecard of 75/100 or leverage profile sits below strict quality index hurdles.
GARP / Value-Growth Blend
Provides balanced valuation margin with strong profitability scores.
Metals & Mining Sector Peer Comparison
Compare VEDL directly against top industry peers by market capitalization:
| Company | 5-Pillar Score | Market Cap | P/E | ROCE | D/E | Scorecard |
|---|---|---|---|---|---|---|
| Vedanta Ltd. (VEDL)Current | 75/100 | ₹1.03 Lakh Cr | 5.21 | 10.1% | 0.65 | — |
| Adani Enterprises Ltd. (ADANIENT) | 58/100 | ₹4.03 Lakh Cr | 54.17 | 5.1% | 1.07 | View |
| JSW Steel Ltd. (JSWSTEEL) | 73/100 | ₹3.13 Lakh Cr | 12.64 | 10.7% | 0.96 | View |
| Hindustan Zinc Ltd. (HINDZINC) | 88/100 | ₹2.34 Lakh Cr | 13.72 | 62.3% | 0.37 | View |
| Hindalco Industries Ltd. (HINDALCO) | 71/100 | ₹2.33 Lakh Cr | 14.19 | 12.7% | 0.71 | View |
| Tata Steel Ltd. (TATASTEEL) | 62/100 | ₹2.30 Lakh Cr | 20.82 | 11.9% | 0.84 | View |
Frequently Asked Questions: Vedanta Ltd.
Q:What is the 5-Pillar Fundamental Score for Vedanta Ltd. (VEDL)?
Vedanta Ltd. has a RupeeTools Fundamental Score of 75/100, placing it in the 'Solid & Healthy' category. Its pillar scores are: Profitability (83/100), Financial Health (65/100), Growth (60/100), Valuation (95/100), and Ownership Quality (78/100).
Q:Is VEDL fundamentally strong for long-term investment?
Yes, VEDL exhibits solid fundamental strength with a 75/100 score, driven by a return on equity of 35.0% and a debt-to-equity ratio of 0.65.
Q:Does VEDL pass the Coffee Can Investing filter?
No. VEDL does not currently meet the strict 15% ROCE and 10% sustained topline compounding threshold mandated by the Coffee Can investing framework.
Q:How does VEDL compare against other Metals & Mining peers?
Within India's Metals & Mining sector, VEDL trades at a P/E of 5.21 and generates an ROCE of 10.1%. Compare its 5-Pillar score of 75/100 against top sector peers like Adani Enterprises Ltd. (58/100), JSW Steel Ltd. (73/100).
Regulatory & SEBI Research Analyst Compliance Disclaimer:
This 5-pillar fundamental score is an automated quantitative health check generated purely from historical public financial statements, corporate filings, and exchange disclosures for educational and informational purposes only. It does NOT constitute investment advice, a stock recommendation, or a solicitation to buy or sell securities. RupeeTools is not a SEBI-registered Research Analyst. Please consult a SEBI-registered financial advisor before making investment decisions.