1:6 Split Ahead: Metal Giant Vedanta Stock Recommended To BUY; New Target Price Rs 536 After 22% Surge YTD

Brokerage Systematix in its latest report said, VEDL's vertically integrated operations make it one of the lowest-cost aluminium producers in the world. Following vertical expansions would further drive cost efficiency: a) Commissioning of 1.5mtpa train II and debottlenecking at the Lanjigarh refinery would enable 100% captive alumina capacity of 6mtpa; b) Commencement of mining operations at the Sijimali bauxite mine (Odisha) and various coal mines, and c) renewable power projects in the pipeline to ensure its commitment to sustainability.

The brokerage further added it is the only domestic aluminium producer with a 430kt smelting capacity expansion plan underway at Korba, BALCO. This coupled with certain debottlenecking plans will likely enable it to achieve its targeted capacity of 3.1mt by FY26. Higher volumes along with the rising proportion of value-added products (VAP) are expected to drive topline and enable margin expansion.

On the valuation, Systematix note said, "We have retained our estimates and value VEDL at 5.5x FY26E EV/EBITDA (4.3x earlier) to arrive at a revised target price of Rs 536/share (Rs 418/share earlier); we are upgrading the stock to BUY. Parent-level debt and capital allocation are key monitorables for VEDL."

Vedanta stock surged 22% YTD.