Metal Stock To BUY: Billionaire Anil Agarwal-backed metal and mining giant, Vedanta Ltd, emerged among top performing stocks during the trading week from March 3rd to 7th, surging by an overall 12% on BSE. The stock holds above Rs 440 levels. The company has been in focus due to its upcoming demerger into six entities. Shareholders of Vedanta will get five new shares against their 1 share in the company. The demerger is expected to be finalised by the first quarter of FY26, as per reports. The latest buying trend was also fuelled after brokerage Emkay Global suggested BUY for a target price of Rs 575.

Vedanta Share Price:

After market hours on March 7th, Vedanta stock closed at Rs 445.35 apiece on BSE, up by 0.6%. Its market cap is Rs 1,74,149.13 crore. The stock is nearing its 52-week high of Rs 527 apiece. Its price-to-equity ratio is 10.47x, while return on equity is 22.07% as of Friday.

Overall, from March 3rd to 7th, Vedanta shares skyrocketed by 11.71% on BSE. The stock was below Rs 400 levels in the start of this week’s session.

Vedanta Demerger Plan:

While the shareholders of the company have approved the scheme of arrangement between Vedanta Limited (Demerged Company or Company) Vedanta Aluminium Metal Limited (Resulting Company 1) Talwandi Sabo Power Limited (Resulting Company 2) and Malco Energy Limited (Resulting Company 3) Vedanta Iron and Steel Limited (Resulting Company 4) and their respective shareholders and creditors under Sections 230-232 and other applicable provisions of the Companies Act, 2013 (Scheme).

However, it faced a setback earlier this week when NCLT Mumbai rejected the scheme presented by Talwandi Sabo Power. Under the scheme, Talwandi Sabo Power was going to be a separate entity and manage the merchant power business.

Vedanta said, “TSPL has been advised that there are legal grounds to appeal the Relevant Order and proposes to appeal the Relevant Order.”

The metal giant decided to become six independent verticals such as Vedanta Aluminium, Vedanta Oil & Gas, Vedanta Power, Vedanta Steel and Ferrous Materials, Vedanta Base Metals and Vedanta Limited — to unlock potential value.

Under the demerger share ratio, every eligible shareholder of Vedanta will get one share each in the five newly listed companies, against their 1 existing share in Vedanta.

As per reports, the finalisation of the demerger is expected in the first quarter of FY26.

Emkay Global On Vedanta Shares:

In its latest report, Emkay stated that they met the management of Hindustan Zinc (HZ), which contributes 40% to Vedanta’s EBITDA. The company operates a world-class asset with industry leading margins and return ratios.

Emkay highlighted that HZ’s focus is to remain a volume-driven company with the target to nearly double capacity to 2mt by 2030 from the current capacity of 1.2mt. Following this, the company would expand by 500kt to ~2mt in five years from now. Management is focusing on consistently converting resources into reserves with a target to keep the life of mine at similar levels.

Also, it highlighted that HZ plans to spend USD1-1.2bn to set up 250kt of combined mining and smelting capacity, which is at the lower end of the global standards of capital intensity in zinc. On the mine re-auctions debate, HZ has the right-of-first refusal and is confident that it would retain the mines.

Furthermore, Emkay estimates (as part of VEDL coverage) HZ to generate EBITDA of Rs186bn, whereas we could be looking at upgrade potential of 13% to Rs210bn, generating 58% margins for FY27E based on the company’s guidance of volumes and costs.

Additionally, Emkay expects Vedanta to rationalize operating cash flows to balance growth capex and dividends, hence the capital allocation framework is likely to be less in favor of dividends. HZ targets to run a small net debt position to finance the projects; the management highlighted positive interest arbitrage given the cost of debt is low at 8%.

Taking into consideration above, Vedanta has suggested BUY on Vedanta for a target price of Rs 575.