Vedanta Limited's first-quarter performance for the current fiscal year largely aligned with analyst expectations, primarily bolstered by robust contributions from its subsidiary, Hindustan Zinc (HZL). The diversified natural resources company saw its profit more than double for the quarter, benefiting from higher London Metal Exchange (LME) prices, improved premiums, and favorable forex gains.
Brokerages Divided on Vedanta Share Outlook
The Q1 results have led to a divergence in analyst opinions regarding Vedanta's stock trajectory. A significant number of brokerages, including CLSA, Investec, JPMorgan, MOFSL, Emkay Global, ICICI Securities, and Kotak Securities, anticipate an upside of up to 32 percent for the stock from its current levels. However, Citi has taken a contra position, projecting an 11 percent decline in Vedanta shares.
Key Analyst Ratings and Target Prices
- Emkay Global: Retained a 'Buy' rating with the highest target of Rs 350.
- CLSA & ICICI Securities: Suggested a target of Rs 345.
- Nuvama: Sees the stock at Rs 333, factoring in strong zinc and silver prices.
- Investec: Set a target of Rs 319.
- Kotak Securities: Provided a target of Rs 305.
- MOFSL: Reiterated a 'Neutral' rating with a fair value of Rs 290, noting the zinc business as the largest contributor.
- Citi: Holds the lowest target price of Rs 235, advocating a 'sell' position.
HZL's Significant Contribution and Future Growth
Emkay Global highlighted that approximately 96 percent of Vedanta's consolidated EBITDA for the quarter originated from HZL. The Zinc International segment also showed improvement, with reduced costs and the Gamsberg Phase-II project on schedule for commissioning in August 2026. The Ferrochrome division delivered a record quarter due to higher realizations.
MOFSL noted that Vedanta's management aims to sustain strong earnings growth, supported by upcoming capacity expansions for higher value-added products and a favorable pricing environment. Guided capital expenditure plans are progressing, expected to lead to further cost savings. The company remains committed to its deleveraging strategy, with increased cash flows slated to support both expansion and debt reduction efforts.
Operational Highlights and Market Factors
Copper India volumes remained healthy, though international copper operations faced impacts from Middle East disruptions. Analysts believe that FY27 earnings are well-supported despite a sequential correction in silver prices, aided by firmer zinc prices, ongoing cost optimization, and supportive sulfuric acid pricing.
Nuvama's analysis incorporates LME zinc prices of $3,200 per ton for FY27 and $3,000 per ton for FY28, alongside silver prices of $65 and $70 per ounce for the same periods. The brokerage applies a 30 percent holdco discount to Vedanta's share in HZL, suggesting that Vedanta's stock movement will likely mirror HZL's share price performance.