Vedanta shares rise 5% as BofA upgrades stock to Buy, raises target price by 75%. Here’s why

Shares of Vedanta Ltd, led by Anil Agarwal, experienced a significant rise of 5% to reach an intraday high of Rs 727.40 on the Bombay Stock Exchange, following an upgrade from BofA Securities. The brokerage firm elevated its rating on the stock from 'Neutral' to 'Buy' and drastically increased its target price to Rs 840 from Rs 480, representing a 75% hike. This optimistic outlook is attributed to favorable projections for aluminium prices, stable silver prices, and an attractive dividend yield anticipated to be over 6% for FY27. BofA also emphasized the company's successful deleveraging efforts, which mitigate risks associated with brand-fee rates and inter-corporate loans. Furthermore, BofA has revised its earnings before interest, taxes, depreciation, and amortization (EBITDA) forecasts for Vedanta for FY26 to FY28 upward by 16-21%, incorporating enhanced aluminium price expectations and a lower holding-company discount. The company reported a remarkable 61% year-on-year increase in consolidated profit for Q3, amounting to Rs 5,710 crore, alongside a significant 34% rise in EBITDA. The robust performance in the aluminium sector, alongside healthy growth in zinc operations, has also contributed to improved return on capital employed, now at 27%. With a 20% year-to-date increase in share price, Vedanta continues to show strong performance in the market.