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Vedanta Stock Soars on Metal Rally
16 Jan
Summary
- Kotak raises Vedanta's price target to ₹780, citing strong metal prices.
- Vedanta's FY27 EBITDA heavily relies on Aluminium, Zinc, and Silver.
- Demerger expected to unlock value and boost stock multiples.
Vedanta Ltd. is strategically positioned to capitalize on the current rally in base and precious metals. Brokerage firm Kotak Institutional Equities has reiterated its 'buy' recommendation, significantly raising the stock's price target to ₹780 from ₹650. This optimism is driven by the fact that nearly 85% of Vedanta's estimated EBITDA for financial year 2027 is projected to come from its Aluminium, Zinc, and Silver segments.
The company's financial outlook is bolstered by these key commodities, which are experiencing record or multi-year high prices globally. Furthermore, anticipated capacity expansions across Aluminium, Zinc, and Power sectors through financial year 2027 and 2028 are expected to be significant catalysts for share price appreciation. Vedanta is nearing completion of necessary clearances for its proposed demerger, with the process expected to commence in Q4 of the current financial year and conclude in phases by Q1 FY2027.
Kotak Institutional Equities has adjusted its EBITDA estimates upwards by 8.7% for FY2027 and 6.9% for FY2028, anticipating value creation through higher multiples post-demerger, particularly in the Aluminium and Power divisions. At spot prices, the target price could reach ₹965. This positive sentiment is shared by other analysts, with Nuvama predicting a 20% EBITDA CAGR for Vedanta from FY2025-2028 due to soaring commodity prices.
