Vedanta Limited shares are in focus after the company reported a robust Q3 performance, leading to positive sentiment from major brokerages. CITI, CLSA, and Motilal Oswal (MOSL) have all weighed in on the company’s outlook, citing strong earnings, deleveraging efforts, and potential growth in aluminium profitability as key drivers.
CITI has maintained a Buy rating on Vedanta with a target price of ₹500, indicating a potential upside of over 13% from the current market price of ₹440.40. The brokerage highlighted a 30% year-on-year and 13% quarter-on-quarter increase in Q3 EBITDA, driven by better commodity prices. However, it noted that some of these gains were partly offset by higher costs in certain business segments. CITI also emphasized Vedanta’s deleveraging at the holding company level, commodity price resilience, and medium-term upside potential in aluminium. The completion of the demerger process, with shareholders and creditors meetings scheduled for February 18, is expected to further unlock value. CITI estimates a dividend of ₹47 per share in FY25, with ₹43.5 already declared, and ₹36 in FY26.
CLSA has an Outperform rating on Vedanta, with a higher target price of ₹530, suggesting a potential upside of over 20%. The brokerage noted that Vedanta’s Q3 EBITDA of ₹111 billion (+13% QoQ) exceeded estimates, primarily due to improved aluminium profitability. While the cost of aluminium production increased due to higher purchased alumina costs, this was offset by better realizations. CLSA expects this trend to continue in Q4 before tapering in FY26/27 as Vedanta ramps up its alumina refinery and commissions new coal and bauxite mines. The cost of production was sequentially lower for zinc operations, both in India and internationally. CLSA also noted that debt repayment to the parent company, Vedanta Resources (VRL), can be managed through brand fees and dividends from Vedanta Ltd.
Motilal Oswal (MOSL), however, remains cautious, maintaining a Neutral rating with a target price of ₹500. The brokerage stated that Vedanta’s operational performance was in line with expectations, but a lower tax outgo drove an APAT (Adjusted Profit After Tax) beat. The company’s net debt stood at ₹574 billion, with net debt/EBITDA improving to 1.4x in Q3 from 1.49x in Q2FY25. MOSL highlighted Vedanta’s commitment to maintaining strong earnings growth, supported by upcoming capacity expansions focused on producing higher value-added products. The management remains firm on its deleveraging plans, with higher cash flows expected to support both expansion and debt reduction efforts.
With Vedanta trading at ₹440.40, the stock reflects a mixed outlook, but overall, brokerages see room for upside driven by strong earnings performance, commodity price resilience, and strategic expansion efforts.
(Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors should consult their financial advisors before making any investment decisions.)