Vedanta Ltd shares are in focus for many reasons. Among these is its implementation date for the demerger of businesses into six listed entities. While the demerger date is delayed once again, the near-term booster is silver rates in India, which have recorded back-to-back record rallies. As per analysts, Vedanta's listed subsidiary Hindustan Zinc is seen to be a key beneficiary of the uptrend in silver prices. Hence, analysts have recommended BUY on Vedanta for a target price of Rs 525.
Vedanta Ltd Share Price:
At the time of writing, Vedanta share price traded at Rs 474 apiece on BSE, up by nearly 2% with market cap of Rs 1,85,352.39 crore. The stock traded at its intraday high.
In the previous session, Vedanta stock price stood at Rs 464.75 apiece, with market cap of Rs 1,81,735.28 crore. YTD, the stock is up nearly 5%. The stock's 52-week high and low are at Rs 527 apiece and Rs 362.20 apiece respectively.
Its price-to-equity ratio is low at 9.33x, while return on equity stood at 25.87%.
Hindustan Zinc Exposure To Silver Prices:
Analysts at Emkay Global's believes that the HZ/VEDL's exposure to silver is underpriced, as the consensus expectations trail the strong move in silver in recent months with the metal now trading at USD47/oz (vs USD34/oz in Q1FY26 and USD30/oz in FY25).
Global peers like Fresnillo and Grupo Mexico have already re-rated YTD, and Emkay's analysts therefore see a strong potential for HZ to be repriced higher, to reflect current prices; this inherently benefits VEDL.
In Emkay's view, a USD1/oz move in silver prices has 1% sensitivity to HZ's EBITDA.
Also, silver being a by-product of zinc suggests that 88% of silver revenue is directly passed-through to EBITDA as the cost of production remains tied to zinc production. Even as silver contributes 20-25% of HZ's revenue profile, the contribution at the EBITDA level is 35-40%.
"HZ delivered EBITDA of Rs174bn, generating EBITDA margin of 53% in FY25; we expect it to generate EBITDA of Rs220bn with 57% margin in FY27E, should spot prices of zinc and silver uphold," the analysts said.
Silver Rates In India:
As of now, silver rates in India are new record high to Rs 1,53,000 per 1kg. While the 100 grams and 10 gram silver rates stood at Rs 15,300 and Rs 1,530 respectively. In September month alone, silver gained by 20%. YTD, the upside is whopping 63% to 65%, outperforming even gold.
As per Emkay's note, Silver prices are witnessing a strong uptrend on the back of a structural supply/demand deficit (with annual supply of ~1bn oz, while demand is estimated at ~1.1bn oz), with a global cyclical recovery alongside a weak DXY acting as a tailwind.
Buy Vedanta Stock!
"HZ (not rated) contributes 40% to VEDL's EBITDA and is the core part of the group portfolio. Per our calculations, a USD1/oz move in silver prices has 1% sensitivity to HZ's EBITDA. Interestingly, silver is a by-product of zinc which implies that 88% of silver revenue is a direct pass-through to EBITDA as the cost of production remains tied to zinc production. We retain BUY on VEDL, with an unchanged TP of Rs525," analysts said on the valuation.
Vedanta Demerger:
Earlier, this year, Vedanta received shareholders' approval for a scheme of arrangement between Vedanta Limited (Demerged Company or Company) Vedanta Aluminium Metal Limited (Resulting Company 1) Talwandi Sabo Power Limited (Resulting Company 2) and Malco Energy Limited (Resulting Company 3) Vedanta Iron and Steel Limited (Resulting Company 4) and their respective shareholders and creditors under Sections 230-232 and other applicable provisions of the Companies Act, 2013 (Scheme).
The demerger is of Vedanta and metals, power, aluminium, and oil and gas businesses to unlock potential value. After the exercise, six independent verticals - Vedanta Aluminium, Vedanta Oil & Gas, Vedanta Power, Vedanta Steel and Ferrous Materials, Vedanta Base Metals and Vedanta Limited - will be created.
Under the demerger agreement, every eligible shareholder of Vedanta will get one share each in the five newly listed companies, against their 1 existing share in Vedanta.
However, the demerger scheme is facing bumpy ride currently. At the latest, billionaire Anil Agarwal has shifted the deadline for demerger to March 2026, due to pending approvals from NCLT and other government authorities. Earlier, the deadline was extended to September 30 from March 31.
The development at the demerger will be keenly watched.
Disclaimer: The views and recommendations expressed are solely those of the individual analysts or entities and do not reflect the views of Goodreturns.in or Greynium Information Technologies Private Limited (together referred as "we"). We do not guarantee, endorse or take responsibility for the accuracy, completeness or reliability of any content, nor do we provide any investment advice or solicit the purchase or sale of securities. All information is provided for informational and educational purposes only and should be independently verified from licensed financial advisors before making any investment decisions.
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