Veddanta Ltd: Buy

CMP: Rs.92.20

A bunch of reforms in the power sector accompanied by smart city projects of the government of India, is likely to increase the demand for the building materials including steel, cement and aluminium. It is to be remembered that Vedanta Ltd is India’s biggest zinc miner.

Meanwhile, there are media reports that local governments and power suppliers, smelter executives in China are saying a bleak outlook for aluminium prices will leave them with no choice but to cut or halt production of the metal if power prices there are not reduced.

Power tariffs account for about 40% of production costs of aluminium smelters in China, the world's top producer and consumer of the metal. Any output reduction in China will help support weak prices of the metal.

Buy the scrip at the CMP of Rs.92.20 (NSE)5, for short term targets of Rs.106-109-112 and medium term targets of Rs.120-125.