Vedanta Shares at Record Highs; Brokerages See Further Upside
- Per brokerages, Vedanta and Hindustan Zinc would perform better while NMDC & Coal India may lag.
- Kotak expects Vedanta’s fair value to increase by Rs 965 on spot prices, with 19% higher EBITDA in FY2027E
Vedanta Ltd. shares touched fresh highs in recent trade, extending their rally as brokerages turned increasingly bullish on the miner, citing a sharp rise in aluminium, zinc and silver prices, improving earnings visibility and potential value unlocking from the upcoming demerger.
The stock’s outperformance comes amid a broader rally in base and precious metals, with aluminium and zinc prices rising 8–12% quarter-on-quarter and silver prices surging nearly 40% over the same period, improving profitability outlooks for diversified non-ferrous producers.
Kotak Institutional Equities in its recent report said Vedanta is best placed to benefit from the ongoing upcycle, given that nearly 85% of its FY2027E EBITDA is expected to be driven by aluminium (~50%), zinc (~20%) and silver (15%). The brokerage also expects demerger and higher commodity prices to benefit the mining major.
“The demerger into five entities should start in 4QFY26E and conclude in phases by 1QFY27E. We expect value unlocking from higher multiples in the aluminium and power divisions,” Kotak said. The brokerage raised its EBITDA estimates by 8.7% for FY2027E and 6.9% for FY2028E, and revised Vedanta’s fair value to Rs 780. At spot prices, Kotak said its fair value would increase to Rs 965, implying 19% higher EBITDA in FY2027E.
Nuvama Institutional Equities echoed the positive outlook, attributing Vedanta’s expected Q3 strength to higher metal prices and operating leverage. The brokerage estimates that Vedanta’s EBITDA could rise ~28% quarter-on-quarter, led by aluminium and zinc, partially offsetting softness in oil and gas.
Nuvama noted that average LME aluminium and zinc prices rose to USD 2,829/t and USD 2,166/t, respectively, while silver prices climbed to USD 55.2/oz. The brokerage added that Hindustan Zinc Ltd. could see EBITDA surge 31.5% QoQ, supported by higher volumes and improved zinc and silver realizations, despite hedging losses.
While Vedanta and other non-ferrous producers are expected to outperform, brokerages remain cautious on select PSUs. Nuvama expects NMDC Ltd. and Coal India Ltd. to underperform in Q3 due to lower realizations and volume pressures.
“NMDC’s EBITDA is likely to dip 15% year on year (EBITDA/t of INR1,610, down 20% year on year) due to a fall in realisation/t (down ~14% YoY to INR4,658/t) partly offset by higher sales volume (up 6.5% YoY to 12.7mt). COAL’s EBITDA is likely to fall 14% YoY mainly due to lower volume (down 4% YoY) and blended realisation (down 1.9% YoY),” Nuvama said.
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