Vedanta shares: Market analysts share fresh stock price targets post plant visit

A couple of brokerages that visited Vedanta’s aluminium plant in Jharsuguda (Odisha), Sindesar Khurd Mine and Rajpura Dariba Smelter near Udaipur (Rajasthan) and Barmer oil block in Rajasthan largely maintained their 'Buy' ratings on the Vedanta stock, with price targets suggesting up to 44 per cent upside potential. The three assets that they visited contributed 90 per cent of Vedanta's consolidated Ebitda in FY24.

"Vedanta's site visit highlights that the company is operating with a technologically advanced asset base. Vedanta is continuously striving to reduce costs across its businesses through backward integration, operational efficiencies, and captive power usage (including renewables). The capex plans are progressing well to drive the next level of growth for the company," Motilal Oswal Securities said.

The Vedanta stock currently trades at 5.8 times FY26 EV/Ebitda. Motilal Oswal Securities has raised its Ebitda estimates by 20 per cent/23 per cent for FY25/26, considering the various cost-reduction initiatives being undertaken by the management. It suggested a neutral on the stock with a revised SoTP-based target price of Rs 500.

Nuvama Institutional Equities said insights into cost-reduction initiatives and value-addition at Vedanta following its recent plants visits are reassuring. It is expecting aluminium to surpass zinc profits by FY26, and both segments to contribute 84 per cent to FY26 Ebitda against 67 per cent in FY24. This brokerage has raised its FY25/26 Ebitda by 5 per cent/6 per cent factoring in operational efficiency, lower aluminium cost o production (CoP) due to captive alumina and higher premiums for aluminium and zinc. Meanwhile, the approval by lenders shall allow for demerger of companies by end-FY25. 

"We value Vedanta ex-Hindustan Zinc at 6 times FY26 EV/Ebitda (earlier 5.5 times) and Hindustan Zinc at 7 times FY26 EV/Ebitda, yielding a target price of Rs 644 (earlier Rs 542); ‘BUY’," it said.

Phillip Capital said it continues to maintain positive stance on the company. Recent upsurge in LME and improving integration in aluminium business will augur well for Vedanta as aluminium is poised to take the top spot in Ebitda contribution while Hindustan Zinc will continue to provide steady cash flows, it said.

"With debt related issues largely settled in the medium term, the company continues to focus on growth and guiding for $ 7.5-10 billion of Ebitda in future. Out of all the business, aluminium has most potential for Ebitda improvement due to improving backward integration into coal and bauxite mining. Given parent Company VRL promised to retire $ 3 billion debt in next three years, we expect divided yield to remain supportive. We maintain buy with our SOTP target price at Rs 552," it said