Higher prices, demerger to boost margins, unlock value for Vedanta

Vedanta, a conglomerate in mining and metals, has seena surge in its share price on the back of multiple triggers.

- DEVANGSHU DATTA

Its demerger appears to be ontrack, a strong nonferrous commodity cycle is boosting margins, and silver bulls are interested in Hindustan Zinc, its subsidiary.

Aluminium and zinc areup7per cent and 13 per cent, respectively, ona quarter-on-quarter (Q-0-Q) basis for October-December.

Aluminium is expected to remain deficit next year as well and supply constraints could sustain higher silver prices in 2026. Hindustan Zinc will benefit from rising silver prices (up 32 percent Q-0-Q), given that it is India’s largest silver producer with 800 tonnes of refining capacity.

Vedanta is expanding with the commissioning of asmelting unit (at Balco) witha capacity of 435 kilotonnes per annum (ktpa). Debottlenecking at Jharsuguda will lift its smelting capacity to 3.1 million tonnes per annum, or mtpa, by FY28. The commissioning of the 1.5 mtpa Lanjigarh alumina refinery is part ofa targeted expansion of alumina capacity to 6 mtpa, backed by bauxite and coal mines. A focus on value-added products is expected to drive premium realisations. Aluminium revenue at Vedanta is expected to grow at 12 per cent annually over FY 25-27, with operating profit/tonne rising to $1,283 by FY27 (vs $870 in FY25).