Vedanta shares have risen over 6% in today’s trade, putting the stock back in the spotlight. Leading brokerage firm, Nuvama Institutional Equities has retained its ‘Buy’ rating on the stock and raised its target price to Rs 806. This suggests an upside potential of 28.5% from current levels. .
The positive outlook by the brokerage is driven by progress on the company’s long-awaited demerger, expectations of higher commodity prices, and a sharper earnings outlook over the next few years.
Let’s take a look at why Nuvama remains constructive on Vedanta and the key reasons behind it –
Nuvama on Vedanta: A demerger nearing the finish line
One of the key factors highlighted by Nuvama is Vedanta’s proposed demerger into five separate listed companies. According to the brokerage report, the company is now “in the final leg of receiving statutory clearances for demerger into five separately listed companies, unlocking value.”
The National Company Law Tribunal has already approved the demerger scheme for most businesses, while approvals for the power division have also come through.
What remains are procedural clearances from the Registrar of Companies and stock exchanges. Once completed, each business will operate and be valued independently, which could make the structure easier for investors to understand.
Nuvama expects “the entire demerger process and listing of all companies by Q1FY27,” though it added that listings could also happen in phases depending on regulatory timelines.
Nuvama on Vedanta: Commodity prices seen staying above past averages
Another major factor supporting the brokerage’s view is the outlook for global commodity prices. Nuvama noted that aluminium, zinc and silver prices are likely to remain higher than their long-term averages due to expected supply shortages.
As per the brokerage report, “amid expectation of global deficit in aluminium, zinc and silver in calendar year 2026, we expect prices to sustain much higher than historical average.” Based on this, Nuvama has raised its price assumptions for aluminium, zinc and silver for the coming years, which directly improves Vedanta’s earnings potential.
Nuvama on Vedanta: Earnings estimates revised upwards
Factoring in stronger commodity prices, cost controls and better volumes, Nuvama has raised its earnings estimates. The brokerage said, “we are increasing financial year 2027 and 2028 earnings before interest, tax, depreciation and amortisation by 17% and 8%.”
It expects Vedanta’s earnings before interest, tax, depreciation and amortisation (EBITDA) to grow at a compound annual growth rate of around 20% between FY25-28. This growth is expected to come from multiple segments, including aluminium, zinc and power.
According to the brokerage report, “cost reduction in aluminium, volume growth in international zinc, power is likely to aid Vedanta post EBITDA compound annual growth rate of 20%.”
Nuvama on Vedanta: Debt allocation and dividends post demerger
Debt management is another area addressed by Nuvama. The brokerage believes that Vedanta will allocate debt carefully across the demerged entities so that each company remains financially manageable.
It also expects key businesses to continue paying dividends even after the split. Nuvama said it expects dividend per share of around Rs 15 from the aluminium business and about Rs 5 from Vedanta, which will house zinc and other operations.
Nuvama on Vedanta: Market price not reflecting full value yet
A key argument in the report is that the current market price does not fully reflect the value of Vedanta’s core businesses. Nuvama has increased valuation multiples for aluminium and revised how it values steel, iron ore and power assets.
The brokerage stated, “current market price does not fully factor even aluminium, zinc, thus all other businesses are available virtually free at current market price.” Based on its sum-of-the-parts valuation, Nuvama arrives at a fair value of Rs 806 per share.
It added that under stronger commodity price assumptions, “fair value may rise to Rs 1,076,” though this is more of a sensitivity scenario.
Why Nuvama retains Vedanta as a top pick
Putting it all together, Nuvama believes Vedanta offers a combination of value unlocking through demerger and earnings improvement driven by commodity trends. The brokerage reiterated, “retain Vedanta as our top pick,” according to the report.
While execution risks and regulatory timelines remain, the brokerage sees the stock as undervalued relative to its future structure and earnings potential.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.