Buy Vedanta; target of Rs 485: Geojit Financial Services

Geojit Financial Services research report on Vedanta

Vedanta Ltd, a subsidiary of Vedanta Resources Ltd, operates across multiple sectors including oil and gas, zinc, lead, silver, copper, iron ore, steel, aluminium, and power, with a presence in India and globally. Revenue from operations rose 6.2% YoY to ₹37,434 cr in Q1FY26, driven by strong market premiums and forex gains, partially offset by lower commodity prices. Aluminium revenue increased 7.7% YoY to ₹14,556 cr, supported by a 17% YoY rise in domestic sales to 313 KT. Total production grew 1.5% YoY to 605 KT. Zinc and lead revenue (India business) declined 4.8% YoY to ₹6,116 cr, despite achieving the highest-ever quarterly mined metal production of 265 KT. Zinc international business revenue surged 52.7% YoY to ₹1,150 cr, driven by a 74% YoY increase in Gamsberg’s production, supported by improved ore availability and mining ramp-up. EBITDA fell 0.3% YoY to ₹9,918 cr in Q1FY26, mainly due to a 20% YoY rise in material costs. Consequently, EBITDA margin contracted by 170 bps YoY to 26.5%. Reported PAT declined 12.5% YoY to ₹4,457 cr, primarily due to a sharp increase in tax expenses (up 92.1% YoY).

Outlook

The company's commitment to deleveraging and improving its capital efficiency, along with a robust business model, strong governance framework and transparent disclosures, positions Vedanta well to address challenges and capitalise on opportunities in the industry. Hence, we upgrade our rating on the stock to BUY with a revised target price of Rs. 485, based on 4.6x FY27E EV/EBITDA.