Shares of Vedanta saw profit-taking after a robust rally in newly demerged entities, with most segments falling by up to 8% over the past 14 sessions. Vedanta Aluminium Metal outperformed, gaining 2% and attracting bullish calls from brokers such as Emkay and Citi, who see strong upside potential driven by global aluminium demand, cost efficiencies, and improving leverage, making it the preferred long-term pick.
On Friday, shares of Vedanta Power, Vedanta Oil & Gas, Vedanta Iron & Steel, and Vedanta Aluminium Metal, which were recently listed following the demerger of Vedanta, declined by up to 8% as investors booked profits after a sharp rally. The four stocks had extended gains for 14 consecutive sessions.
Among the demerged entities, Vedanta Power led the losses, falling 8% to Rs 44.82 on the BSE, while Vedanta Oil & Gas dropped 7% to Rs 41.34. Vedanta Iron & Steel slipped 4% to Rs 40.84, ending a 13-session rally during which the stock had surged by 113%.
In contrast, Vedanta Aluminium Metal, regarded as the group’s crown jewel, bucked the trend, gaining 2% to Rs 471.
Which Vedanta Stock Looks Best Placed?
On Thursday, Emkay initiated coverage on Vedanta Aluminium Metal with a Buy rating and a target price of Rs 550, implying a 19% upside from current levels.
“We believe the market is yet to fully appreciate its structural earnings potential. We remain constructive on the medium-term aluminium outlook, with the global market likely to remain in deficit through CY28 despite Indonesia’s announced capacity additions, given execution bottlenecks and China’s effective 45 mt production cap,” the domestic brokerage noted.
Last month, Citi initiated coverage on Vedanta Aluminium Metal with a Buy rating and a target price of Rs 560 per share, naming the newly listed stock its top pick in the Indian metals space.
Citi cited several factors behind its bullish stance, including a favourable aluminium outlook, growth opportunities from the BALCO expansion and Vedanta Aluminium debottlenecking, a stronger cost structure through higher captive alumina, domestic bauxite and captive coal, and improving leverage. It expects the company to achieve a net cash position by FY28.
Expecting aluminium prices to average around $3,400 per tonne in FY27-28, Citi stated that every $100-per-tonne change in LME prices could impact the company’s EBITDA by 4-5.5% and alter its fair value by nearly Rs 30 per share.
Vedanta Iron and Steel Share Price
The company’s share price has recorded the sharpest gains so far among the four Vedanta Group companies. The rally in Vedanta Iron and Steel shares intensified after Azim Premji-backed Premji Invest’s PI Opportunities AIF V LLP purchased shares worth Rs 102 crore after the stock’s market debut.
PI Opportunities AIF V LLP, an investment arm of Premji Invest owned by Indian billionaire businessman and Wipro Chairman Azim Premji, acquired nearly 4.84 crore shares worth Rs 101.68 crore at Rs 21.02 apiece through a bulk deal.
Vedanta Iron & Steel operates across India and Africa, focusing on iron ore exploration, mining, and processing. It also produces high-quality steel, wire rods, TMT bars, pig iron, ductile iron (DI) pipes, ferro-silicon, cement, and metallurgical coke.
Vedanta Oil & Gas Share Price
Vedanta Oil & Gas, which includes Cairn Oil & Gas, claims to be India’s leading private-sector upstream player, targeting production of 300,000 to 500,000 barrels per day through a planned investment of $5 billion.
“A little over a decade ago, Cairn was valued at $14.5 billion. When we acquired Cairn, its market capitalisation was half of the asset value. Today, Cairn has grown manifold, adding more reserves as well as a natural gas portfolio,” the company stated in a press release earlier this year.
Vedanta Power Share Price
Brokerages remain divided on valuations for Vedanta Power. Domestic brokerage Emkay estimates a value of around Rs 51.7 per share, while Kotak Institutional Equities places it at Rs 60 per share. Nuvama’s valuation implies a value of around Rs 47 per share, while CLSA’s estimate corresponds to roughly Rs 35 per share.
The company owns over 4 GW of installed power generation capacity across Punjab, Andhra Pradesh, Chhattisgarh, and Odisha. Its portfolio includes the Talwandi Sabo Thermal Plant, Meenakshi Energy, Sakti Power, and the Jharsuguda Thermal Plant.
Management has outlined plans to become one of India’s top three private thermal power producers by FY33 through capacity expansion and asset turnarounds. The business also benefits from several long-term and medium-term power purchase agreements with state utilities, providing a degree of revenue visibility.
From a pure valuation and structural standpoint, Sunny Agrawal, Head of Fundamental Research at SBI Securities, stated that Vedanta Aluminium Metal offers the most compelling risk-reward among the five entities for long-term investors.
The aluminium business has emerged as the largest and most scalable vertical within the group, benefiting from strong global demand drivers such as EVs, renewables, and infrastructure, as well as integrated cost efficiencies that enhance margin resilience across cycles, he added.
Conversely, the residual Vedanta entity, which includes the zinc-silver business (its stake in Hindustan Zinc and Zinc International) and the base metals business, offers stable cash flows and an attractive dividend yield but is likely to see limited valuation re-rating, given that much of the zinc value is already priced in.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
Source: Economic Times
