Buy Call on Vedanta: Here’s What Kotak Sees in the Stock

Synopsis: Kotak Institutional Equities raised Vedanta’s target to ₹780, seeing further upside to ₹965 driven by metal price strength, demerger and capacity expansion, implying significant upside of 42.99 percent.

This large-cap stock, engaged in exploring, mining, smelting, and refining metals like zinc, aluminium, copper, alongside oil, gas, power generation, and semiconductor displays globally, is in focus after Nomura raised a target to Rs. 780, seeing further upside to Rs. 965, which has an upside potential of 42.99.

With a market capitalization of Rs. 2,66,219.22 crores, the share of Vedanta Limited has reached an intraday high of Rs. 686.05 per equity share, rising nearly 1.66 percent from its previous day’s close price of Rs. 674.85. Since then, the stock has retreated and is currently trading at Rs. 680.80 per equity share. 

Brokerage Recommendation:

Kotak Institutional Equities, a prominent brokerage firm, has recommended a “Buy” call on Vedanta Limited with a revised and raised target price of Rs. 780 per share from Rs. 650 per share earlier, indicating an upside potential of 15.58 percent from its previous day’s close price of Rs. 674.85.

Further, Kotak Institutional Equities expects Vedanta’s share price target to rise further to Rs. 965 per share, supported by the upcoming demerger and capacity expansion plans. This implies an upside potential of around 42.99 percent from the previous day’s closing price.

Rationale for Target:

Kotak Institutional Equities has given a positive target on Vedanta mainly because of its strong earnings mix and favourable market conditions. Nearly 85 percent of Vedanta’s FY27 EBITDA is expected to come from Aluminium, Zinc, and Silver. These metals are currently trading at record or multi-year high prices globally, which supports higher profitability and stable cash flows for the company.

Among these segments, Aluminium alone is likely to contribute around 50 percent of FY27 EBITDA, while Zinc and Silver together add another 35 percent. This strong dependence on high-performing metals gives Vedanta better earnings visibility. Kotak believes that even small improvements in metal prices can significantly boost profits, as these businesses already operate at a large scale.

Another key reason for the higher target is Vedanta’s capacity expansion plans across Aluminium, Zinc, and Power during FY27 and FY28. Increased production capacity means higher volumes, better operating leverage, and stronger long-term growth. These expansions are expected to support earnings over the next few years.

Kotak is also optimistic about Vedanta’s proposed demerger, which is close to receiving approvals. The brokerage expects the process to start in Q4 of the current year and finish by Q1 FY27. The demerger could unlock value, especially in Aluminium and Power, leading Kotak to raise EBITDA estimates and set a higher spot price target of Rs. 965 per share.

Q2 FY26 Capacity Overview

In Q2 FY26, Vedanta reported strong operational capacities across its metals business. Aluminium operations recorded a record quarterly alumina production of 653 kilotonnes. In the zinc segment, Zinc India achieved its highest-ever second-quarter mined metal production of 258 kilotonnes, while Zinc International reported mined metal production of 60 kilotonnes.

In other segments, oil and gas production stood at 89.3 thousand barrels of oil equivalent per day, while iron ore production at IOG was 0.1 million tonnes. Pig iron production reached 238 kilotonnes, and FACOR ore production stood at 47 kilotonnes. In power, merchant thermal capacity increased to 4.2 GW after commissioning Athena 600 MW and Meenakshi 1,000 MW plants.

Company Overview:

Vedanta Limited was established on June 25, 1965, originally as Sesa Goa Private Limited. The company stands as a diversified global natural resources conglomerate, primarily engaged in mining, smelting, and processing a wide array of metals and energy resources. It focuses on exploring, extracting, and refining commodities like zinc, lead, silver, copper, aluminium, iron ore, oil, and gas, while also venturing into power generation, glass substrates, and semiconductor displays. 

Recent Quarter Results:

Coming into financial highlights, Vedanta Limited’s revenue has increased from Rs. 37,634 crore in Q2 FY25 to Rs. 39,868 crore in Q2 FY26, which has grown by 5.94 percent. The net profit has decreased by 37.91 percent from Rs. 5,603 crore in Q2 FY25 to Rs. 3,479 crore in Q2 FY26.

Vedanta Limited’s revenue and net profit have grown at a CAGR of 14.82 percent and 8.11 percent, respectively, over the last four years.

In terms of return ratios, the company’s ROCE and ROE stand at 25.3 percent and 38.5 percent, respectively. Vedanta Limited has an earnings per share (EPS) of Rs. 30.7, and its debt-to-equity ratio is 2.12x.

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