Vedanta Surges 5% as BofA Lifts Target Price to ₹840

Introduction

Shares of Anil Agarwal-led Vedanta Ltd. climbed as much as 5% on Wednesday, reaching an intraday high of ₹727.40 on the BSE. The surge followed a significant ratings upgrade from BofA Securities, which moved the stock to 'Buy' from a 'Neutral' stance and increased its target price by 75% to ₹840 from ₹480.

The BofA Upgrade in Detail

The international brokerage's optimistic revision is based on several key factors. BofA highlighted a more constructive outlook for aluminium prices, which directly benefits Vedanta's core operations. Additionally, supportive silver prices and an attractive estimated dividend yield of over 6% for FY27 contribute to the positive assessment. The report also noted that significant deleveraging at the parent company level mitigates risks related to potential increases in brand-fee rates or inter-corporate loans, a long-standing concern for investors.

Revised Financial Estimates

In line with its upgraded rating, BofA Securities has raised its FY26 to FY28 EBITDA estimates for Vedanta by 16–21%. This adjustment incorporates higher aluminium price assumptions, an increased fair value for its subsidiary Hindustan Zinc, the depreciation of the Indian Rupee against the US Dollar, and a reduced holding-company discount from 15% to 5%. These revisions reflect a comprehensive re-evaluation of the company's earnings potential.

Market Reaction and Stock Performance

The market responded positively to the upgrade, with the stock price reflecting renewed investor confidence. This recent rally is part of a broader upward trend for Vedanta. On a year-to-date basis in 2026, the stock has gained 20%, and it has delivered a substantial 60% return over the last six months. The strong performance underscores the growing optimism surrounding the company's strategic direction and operational efficiency.

Strong Financial Foundation: Q3 Performance

Vedanta's recent financial results provide a solid basis for the bullish sentiment. The company reported a 61% year-on-year increase in consolidated profit to ₹5,710 crore for the third quarter. Revenue grew by 19% to ₹45,899 crore. More impressively, EBITDA climbed 34% year-on-year to a record ₹15,171 crore, with margins expanding significantly to 41%. This performance was driven by higher metal prices, stronger premiums, improved sales volumes, and effective cost management. The robust operating performance also led to better capital efficiency, with the return on capital employed (ROCE) improving by nearly 300 basis points to 27%.

Broader Analyst Sentiment

While BofA's target is among the highest on the Street, it is part of a wider trend of positive analyst coverage. A consensus of 13 analysts shows a strong inclination towards buying, with six recommending a 'Strong Buy' and three a 'Buy'. This indicates that a majority of market experts see further upside potential in the stock.

Strategic Outlook: Demerger and Capex

Looking ahead, Vedanta is progressing with its plan to demerge its businesses into five separate listed entities. This move, expected to be completed by the end of FY26, is widely anticipated to unlock significant value for shareholders by creating more focused, pure-play companies. Furthermore, Vedanta's chairman has indicated an ambitious plan to invest $10 billion in India over the next four to five years, signaling a strong focus on growth and expansion across its various business segments.

Conclusion

Vedanta's stock is currently benefiting from a confluence of positive factors, including strong commodity prices, robust operational performance, and strategic initiatives like the demerger. The significant target price hike from BofA Securities serves as a major validation of the company's improving fundamentals and growth prospects. For investors, the key factors to monitor will be the successful execution of the demerger and the deployment of its planned capital expenditure.