Kotak upgrades Vedanta shares to Buy and raises price after NCLT nod for demerger

Shares of metals and mining giant Vedanta could rise as much as 14%, according to Kotak Institutional Equities. The company has upgraded the shares to buy and raised the price target after the company received formal approval from the National Company Law Tribunal (NCLT) for its proposed demerger into multiple independent, sector-focused listed entities.With a target price of Rs 650 per share, the brokerage implies an upside potential of 14% from the current market level. “Vedanta has received a much-delayed NCLT approval for its demerger and appears on track to complete the restructuring by the end of fiscal 2026,” the Kotak note said.

The brokerage also added that buoyant commodity prices put Vedanta in a good spot with multiple growth projects in the aluminum and energy segments coming on stream over the financial year 2026-2027. “Our bull case scenario for spot commodity prices suggests 10% higher EBITDA (attributable) and a value of Rs 770 per share based on FY28 financials,” the broker said in a December 16 note. Vedanta’s earnings before interest, taxes, depreciation and amortization (EBITDA) and earnings per share (EPS) may rise at a compound annual growth rate (CAGR) of 17% and 24% respectively over the financial year 2025-2028, led by higher volumes and strong commodity prices, Kotak’s note said.

Debt concerns for the parent company, Vedanta Resources, are also far behind, says Kotak. He added that it expects the company to obtain remaining regulatory approvals and complete the demerger process as per guidance by the end of fiscal 2026.

Apart from the split, Kotak said supply disruptions in copper and supportive macroeconomic factors such as weakening USD and Fed rate cuts also bode well for the company. Three key raw materials – aluminium, zinc and silver – make up 82% of attributable EBITDA for FY27.

“We believe that aluminum is best placed over the medium term based on fundamentals, with structural demand growth due to energy transition investments and lagging supply growth due to capacity constraints in China. We estimate a balanced market in CY2026E due to Indonesian supply following a multi-year deficit from CY2027E. We expect the zinc market to remain in surplus due to weak demand and new supply, and we expect the prices will correct,” the report said. paves the way for the demerger of Vedanta into four independent, purely listed companies, in addition to the currently listed Vedanta, creating a total of five separate listed entities.

According to the company, Vedanta shareholders will receive proportionate shares in each of the newly created listed entities, in addition to their existing shares. The new structure is designed to enable each company to respond independently to sector-specific market trends, investment cycles and customer needs, while maintaining continuity of ownership for existing investors.

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