In a recent note, brokerage firm Emkay Global Financial Services has maintained a bullish stance on Vedanta Ltd (VEDL), assigning a ‘Buy’ rating with a target price of Rs 525, implying a 13% upside from the current market price of Rs 466.
The positive outlook comes after Emkay’s visit to Hindustan Zinc’s Rampura Agucha mine, where the brokerage interacted with the management and assessed the company’s strategic roadmap.
Vedanta Share Price Target
Emkay highlighted Hindustan Zinc (HZ) as a key earnings driver, contributing around 40% of Vedanta’s profits.
Capacity Expansion to 2 Million Tonnes by 2030
Hindustan Zinc has outlined an ambitious plan to expand zinc smelting capacity from 1.1 million tonnes (mt) to 2 mt by the end of this decade.
As a first step, the board has approved a 250,000-tonne expansion at the Debari smelter, backed by a $120 billion capex, with completion targeted in 36 months.
Of this capex, $62 billion is allocated for the smelter, $10-12 billion for a fumer plant, and the rest for mine development. Emkay noted that capex intensity of USD 2,500/tonne is well below the global benchmark of $3,500/tonne, indicating cost efficiency.
Additionally, the management hinted at potential further expansions of up to 2 mt, likely placing the peak capex phase in FY28-30.
Profitability, Dividend Outlook & Valuations
Hindustan Zinc is placed in the first quartile of the global zinc cost curve, with a cost of production at USD 1,050/tonne, and has historically maintained EBITDA margins around 50%.
“We estimate (as part of VEDL coverage) HZ’s EBITDA at ₹170 billion and free cash flow of ₹100 billion in FY26E/27E, based on zinc LME of USD 2,600/tonne and silver price of USD 36/oz,” Emkay said in its report.
EBITDA could climb to $200 billion with the ongoing expansion. Emkay expects steady cash flows to support a 4–5% dividend yield, with excess cash likely used for future capex.
The report added that HZ trades at 9x FY27 EBITDA, suggesting valuation comfort. The management also signaled its willingness to optimize the capital structure by increasing leverage from its current near-zero debt status.
Strategic Moves and Sustainability Push
Emkay’s interaction revealed further growth catalysts:
The company is setting up a 1 million tonne per annum fertilizer plant, leveraging its sulphuric acid by-product.
Renewable energy share in HZ’s operations is expected to rise from 7% in FY25 to 27% in FY26, leading to net savings of ₹0.5/unit.
On the re-auction of mines due in 2030, HZ retains a right of first refusal. Management expressed confidence in retaining the mines due to high entry barriers like reserve development and smelter setup.
Emkay also lauded Hindustan Zinc’s on-ground CSR efforts and sustainability vision. The company’s increasing focus on renewables, waste utilization, and community initiatives adds to its long-term investment appeal.
With Hindustan Zinc poised for a significant ramp-up in production, backed by low costs, strong margins, and efficient capital allocation, Vedanta’s stock appears well-placed for long-term gains. Emkay’s upgraded Vedanta share price target reflects confidence in the company’s strategic execution and shareholder value creation.
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