Nuvama Raises Vedanta Price Target to ₹644
Nuvama Institutional Equities has boosted Vedanta’s price target to ₹644 per share from ₹542, reflecting an approximately 20% increase. The brokerage firm maintains a ‘Buy’ rating on Vedanta, citing company-specific triggers such as cost savings and volume growth in aluminum and zinc, as well as the anticipated demerger of its activities.
Positive Stance Amid Company-Specific Triggers
Nuvama’s favorable perspective on Vedanta is based on anticipated cost reductions and volume growth in aluminium and zinc. The demerger of Vedanta’s operations is also a contributing reason to this upbeat outlook. Vedanta is close to gaining lender permission for its vertical demerger, which is scheduled to be completed by the end of FY25. This demerger is expected to release significant value for the minority shareholders.
SBI Grants Consent for Vedanta’s Demerger
According to reports, the State Bank of India (SBI) approved Vedanta’s proposed demerger. The demerger plan calls for Vedanta to be divided into six autonomous pure-play firms. The proposed demerger will result in independent firms for aluminum, oil and gas, electricity, steel and ferrous materials, and base metals. Vedanta will continue to own the existing zinc business and any future incubated firms. Shareholders will receive one share of each of the five newly listed entities for every share they own in Vedanta.
Increased EBITDA Estimates for FY25 and FY26
Nuvama has increased its Vedanta EBITDA projections for FY25 and FY26 by 5% and 6%, respectively. This adjustment takes into account operational improvements, lower aluminium production costs due to captive alumina, and greater premiums for aluminum and zinc. Vedanta shares are up about 75% in 2024, surpassing the benchmark Sensex’s 7% gain. This is Vedanta’s best calendar-year performance since 2021.
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