High dividend yield stock jumps 5% after BoFA raises target price by 75%; Check target price

SYNOPSIS: Shares of this diversified natural resource group surged after BofA upgraded the stock to “buy” and raised its target price by 75 percent to Rs. 840, citing a stronger aluminium outlook, silver support, and deleveraging.

During Wednesday’s trading session, shares of the world’s leading producer of metals, oil & gas, critical minerals, power and technology, surged more than 5 percent on the stock exchanges. The brokerage BofA (Bank of America Corporation) upgraded its rating from “neutral” to “buy” and raised its target price by 75 percent, signalling renewed confidence in the company’s outlook.

With a market cap of Rs. 2.85 lakh crores, shares of Vedanta Limited are currently trading in the green at Rs. 728.5, up by around 5 percent, as against its previous closing of Rs. 695.4 on BSE. The stock has delivered positive returns of around 78 percent in one year, as well as over 3 percent in the last one month.

Brokerage Target & Outlook

BofA Securities revised its price target for Vedanta Limited by 75 percent to Rs. 840 per share from Rs. 480 earlier and upgraded its rating from ‘neutral’ to ‘buy’. Based on the previous closing price, the revised target implies a potential upside of roughly 21 percent. The sharp upward revision reflects the brokerage’s improved earnings outlook and more constructive view on the company’s core businesses.

The brokerage’s positive outlook is on the back of a stronger forecast for aluminium prices, stable silver trends, and the expectation of an attractive dividend profile. BofA believes Vedanta could offer a dividend yield of over 6 percent by FY27E, which may appeal to income-focused investors, particularly in a supportive commodity cycle.

BofA also highlighted that significant deleveraging at the parent company level can reduce financial risk, particularly the possibility of higher brand-fee charges linked to inter-corporate loans.

Factoring in higher aluminium price assumptions, an improved fair value estimate for Hindustan Zinc, a weaker rupee against the USD, and a reduction in the holding company discount to 5-15 percent, BofA has increased its FY26-FY28 EBITDA estimates for Vedanta by 16 to 21 percent.

With a target price of Rs. 840, BofA now holds one of the more optimistic views on the stock. Its estimate ranks among the highest on the Street, following targets of Rs. 900 by Citi and Rs. 898 by Systematix Group.

Financials

For Q3 FY26, the company posted a consolidated revenue from operations of Rs. 23,369 crores, reflecting a sequential growth of around 25 percent QoQ compared to Rs. 18,747 crores in Q2 FY26. Likewise, on a year-on-year basis, revenue increased by nearly 37 percent from Rs. 17,063 crores recorded in Q3 FY25.

Net profit for Q3 FY26 stood at Rs. 7,807 crore, indicating an impressive increase of over 124 percent QoQ from Rs. 3,479 crores in Q2 FY26, as well as a year-on-year rise by around 60 percent from Rs. 4,876 crores reported in Q3 FY25.

Vedanta Limited is a diversified natural resource Group engaged in the business of exploring, extracting and processing minerals, oil and gas. The company engages in the exploration, production and sale of zinc, lead, silver, copper, aluminium, iron ore, oil & gas and has a presence across India, South Africa, Namibia, Ireland, Australia, Liberia and the UAE. 

It is also in the business of commercial power generation, steel manufacturing and port operations in India and the manufacturing of glass substrate in South Korea and Taiwan.

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