The brokerage cited value unlocking from the demerger and estimated the fair value of each entity under an FY28E sum-of-the-parts framework, maintaining Vedanta as a top pick.
The stock’s rally was further supported by sustained gains in commodity prices, which pushed the company’s market capitalisation to Rs 2.5 lakh crore. Over the past twelve months, Vedanta has delivered returns exceeding 52%.
According to Nuvama Institutional Equities, Vedanta is nearing the completion of regulatory approvals required for its demerger. Strong commodity prices, cost optimisation, and volume growth are expected to reinforce the company’s earlier investment thesis.
The brokerage has revised its FY27E and FY28E EBITDA estimates upward by 17% and 8%, respectively, factoring in higher commodity prices. This implies a projected 20% CAGR in EBITDA from FY25 to FY28E. Considering value unlocking from the demerger, Nuvama assigns a sum-of-the-parts target price of Rs 806 per share, up from Rs 686, retaining Vedanta as a top pick.
Historically, from FY16 to FY26, LME aluminium, zinc, and silver averaged $2,170 per tonne, $2,754 per tonne, and $22.7 per ounce, respectively. Amid anticipated global deficits in these metals in CY26, Vedanta expects sustained prices well above historical averages. Average prices for FY27E and FY28E are now projected at:
– Aluminium: $3,000 and $2,750 per tonne
– Zinc: $3,000 and $2,900 per tonne
– Silver: $60 per ounce
The INR to USD exchange rate is assumed at 89 for FY27E and FY28E, up from 87.5 earlier.
Higher commodity prices, aluminium cost reductions, and volume growth in international zinc and power operations are expected to drive a 20% EBITDA CAGR over FY25–FY28E, reaching Rs 724 billion.
Debt allocation across the demerged entities is expected to be judicious, ensuring comfortable servicing. Vedanta Aluminium, including 51% of Balco, and Vedanta, housing Hindustan Zinc, International Zinc, and other businesses, are likely to continue dividend payouts, with expected DPS of around Rs 15 from Vedanta Aluminium and Rs 5 from Vedanta in FY27E and FY28E.
Value unlocking from the demerger has led to an upward revision in valuation multiples: aluminium is now valued at 6.5x EV/EBITDA, up from 6x; steel and iron ore are valued at replacement cost versus 5x EV/EBITDA earlier; and power also commands higher valuation. The sum-of-the-parts valuation of Rs 806 per share includes Rs 408 for aluminium and Rs 293 for Vedanta Limited, indicating that the market has not fully priced in aluminium and zinc, leaving other businesses nearly free at current prices. On a mark-to-market basis, with aluminium at USD 3,150 per tonne, zinc at USD 3,200 per tonne, and silver at USD 85 per ounce, FY28E EBITDA could rise to Rs 923 billion and fair value could reach Rs 1,076 per share.
Vedanta’s demerger scheme, excluding the power division, was approved by the NCLT on 16 December 2025, while the power division received approval on 9 January 2026, a key milestone. The company is now in the final stage of obtaining procedural regulatory approvals from the Registrar of Companies and stock exchanges.
Once completed, this will enable the demerger and listing of five separate entities. Depending on the timing of these approvals, Vedanta may choose to list the companies in phases. The full demerger and listing of all entities is expected by Q1 FY27.
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