Vedanta Q4 Review: Analysts Remain Cautious On Near-Term On Lower Commodity Prices, Project Execution Risks

Vedanta Ltd.'s expansion strategy and improving balance sheet support its long-term prospects, but near-term upside remains capped by weak global commodity prices and project execution risks, according to analysts.

Vedanta's fourth quarter results were broadly in line with expectations, with stable Ebitda performance and improving cost dynamics across key segments.

Aluminium cost pressures persist but are offset by high realisations, while zinc and oil & gas segments saw mixed trends. Both CLSA and BofA see expansion projects and the proposed demerger as key drivers going forward, though they differ on valuation, with CLSA staying Outperform and BofA maintaining Neutral.

CLSA maintained its ‘Outperform' rating and raised its target price slightly to Rs 535, citing the company's transformational expansion initiatives across aluminium, iron ore, and power. Vedanta's aluminium cost of production rose due to higher alumina input prices but is expected to ease from June, aided by a recent correction in alumina prices. CLSA believes that smelter expansions and greater upstream integration (including alumina and bauxite) should help reduce long-term CoP and improve margins.

BofA, however, remained more cautious, retaining a ‘Neutral' rating and trimming its price target to Rs 455, noting subdued global pricing trends and a cut in target multiples in line with global upstream peers. While recognising the aligned EBITDA print, BofA cited the drag from oil & gas, zinc, and iron ore divisions due to weak pricing and operational factors.

Both brokerages highlighted the company's improving balance sheet. Net debt declined to Rs 53,300 crore, and Vedanta Resources has refinanced key maturities, reducing near-term debt concerns. CLSA noted this as a positive shift, saying leverage worries are now largely behind.

The demerger remains a key catalyst. BofA expects the demerger to be completed by September 2025, noting the simplification of the corporate structure could unlock shareholder value. Expansion updates also point to ongoing investments: alumina refinery upgrades, capacity additions in Jharsuguda, and commissioning of new power assets are scheduled over financial year 2026.

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