Vedanta Limited, one of India’s most diversified natural-resources powerhouses, stands at the intersection of a global commodities upswing and a domestic expansion cycle that promises to reshape its earnings trajectory. ICICI Securities has reiterated a BUY rating with a target of Rs 650, pointing to rising aluminium, zinc and silver prices, aggressive capacity additions, and a rapidly strengthening balance sheet. The company’s expansion in smelting, alumina integration, and value-added product lines signals a powerful shift toward higher EBITDA/tonne profitability.

ICICI Securities Issues a BUY Call With Rs 650 Target

ICICI Securities’ latest research underscores a bullish stance on Vedanta, highlighting a 19% upside potential from the CMP of Rs 545. A confluence of rising non-ferrous prices, volume expansion, and efficient cost structures justifies this conviction. The brokerage also emphasizes that Vedanta’s evolving portfolio—particularly aluminium and silver—could serve as major catalysts for earnings outperformance over FY25–27E.

Global Non-Ferrous Upswing Strengthens Vedanta’s Earnings Visibility

• Aluminium and zinc prices have shown resilient upward momentum.
During the Oct–Dec 2025 period, aluminium rose nearly 7% QoQ, while zinc delivered a striking 13% QoQ gain. Industry data suggests aluminium could stay in deficit through 2026, reinforcing supportive pricing.

• Silver emerges as a stealth earnings driver.
Silver surged 32% QoQ, benefiting Hindustan Zinc—India’s largest silver producer with ~800 MT refining capacity. Because silver carries minimal processing cost, the incremental revenue largely flows directly into profitability. This reinforces the dual-engine benefit for both Hindustan Zinc and Vedanta.

• Structural demand remains intact.
Supply disruptions and sustained industrial consumption trends point toward a firm pricing environment well into 2026. For Vedanta, this means higher realisations across its metals portfolio—crucial at a time when capacity expansions are coming online.

Aluminium Expansion Becomes the Core Engine of Growth

• Commissioning of 435 KTPA at BALCO significantly lifts smelting capacity.
Vedanta is executing one of the most ambitious aluminium expansion programmes in India. The fresh BALCO capacity has already been commissioned, and debottlenecking at Jharsuguda will push total smelting volumes to ~3.1 MTPA by FY28E.

• Alumina integration sharply improves cost efficiency.
The commissioning of the 1.5 MTPA Lanjigarh alumina refinery provides meaningful insulation from volatile alumina prices. Long-term plans to push alumina capacity to 6 MTPA, supported by captive bauxite and coal mines, reinforce margin stability.

• Value-added products are set to unlock premium pricing.
Vedanta’s pivot toward downstream, high-margin aluminium products is expected to expand EBITDA/tonne meaningfully. By FY27E, EBITDA/tonne is projected to rise to ~$1,283, up from ~$870 in FY25, marking a transformational shift in earnings composition.

Cash Flows Strengthen, Leverage Moves Toward Comfort Zone

• Strong operating cash flows drive de-leveraging.
Vedanta generated over Rs 30,000 crore in cumulative CFO since FY22, enabling the company to narrow its Net Debt/EBITDA to 1.37x as of September 2025. Management is targeting ~1x by FY27.

• Free cash flow supports dividend continuity.
Despite historically high dividend payouts, Vedanta is expected to sustain a forward dividend yield of ~6%, underpinned by robust FCFF generation.

• Multi-segment expansion remains on track.
Zinc India, Power, and Steel divisions are aligned with the company’s multi-year capex roadmap—supporting a consolidated EBITDA CAGR of 25% over FY25–27E.

Financial Trajectory Points Toward Strong Rerating

Below is the key financial summary from the report, reformatted into HTML for clarity:

ICICI Securities highlights Vedanta’s return ratios above 20%, a strong indicator of value creation during the expansion cycle.

Stock Levels and Investment Targets

• Current Market Price (CMP): Rs 545
• Recommended Rating: BUY
• Target Price: Rs 650
• Upside Potential: ~19%
• Investment Horizon: 6–12 months

Key Technical Levels to Watch:

Immediate Support: Rs 515

Secondary Support Zone: Rs 495–500

Upside Resistance: Rs 575

Breakout Confirmation: Above Rs 590

Investor Target: Rs 650 (as per SOTP-based valuation)

Risks That Investors Must Monitor

• Commodity price reversal.
A sustained decline in aluminium, zinc, or silver prices could impair realisations and earnings.

• Delays in commissioning new capacities.
If the new expansions at BALCO, Jharsuguda or Lanjigarh face delays, near-term volume projections may be impacted.

• Regulatory and environmental considerations.
As a large natural-resources player, Vedanta remains exposed to compliance-related shifts in mining and power policies.

Outlook: A Commodities-Backed Earnings Revival Story

Vedanta stands at a turning point where global market forces and strategic expansion converge to create a potentially transformative earnings cycle. Rising aluminium and zinc prices, surging silver realisations, and expanded smelting capacity provide clear top-line momentum. Meanwhile, integrated alumina sourcing and de-leveraging drive bottom-line resilience.

The BUY call from ICICI Securities, backed by a target of Rs 650, reflects confidence in a multi-year rerating for one of India’s most influential metals and mining conglomerates.