Nuvama has placed a strong conviction on Vedanta, projecting a sharp revival in stock price backed by rising commodity prices and robust EBITDA growth outlook.
Why is Vedanta Seen as Irresistible by Nuvama at Current Levels?
About Vedanta and Nuvama’s Outlook
Vedanta Limited, a diversified natural resources company, operates across zinc, aluminium, oil & gas, silver, and power. The company has often been viewed as cyclical, with fortunes tied closely to commodity price movements. However, according to Nuvama’s latest report, Vedanta stands out as a compelling bet at current market price (CMP), with a BUY recommendation and a target price of ₹601.
EBITDA Growth and Commodity Price Assumptions
Nuvama projects that Vedanta will deliver a 20% EBITDA CAGR over FY25–FY27. These forecasts are based on conservative assumptions of LME zinc, aluminium, and silver prices at USD 2,750, USD 2,500, and USD 38 respectively for FY27. If commodity prices hold above these benchmarks, upside potential is significant.
Why Vedanta is a Beneficiary of Rising Commodities
Commodity cycles remain one of the most important drivers of Vedanta’s earnings. With global supply constraints, structural demand in renewable energy, and the push towards electric vehicles, base metals like zinc and aluminium are set to remain in focus. Similarly, silver’s role in green technologies strengthens Vedanta’s positioning.
Risks Investors Should Monitor
Despite the bullish view, investors must remain cautious about certain risk factors. Commodity-linked businesses are inherently volatile, and a sudden reversal in global demand could hurt earnings. Additionally, Vedanta’s high leverage, refinancing obligations, and exposure to currency movements add to financial uncertainties.
How Should Traders Position Themselves?
For traders, Vedanta’s strong linkage to commodity cycles means heightened volatility, which can be both an opportunity and a risk. A supportive commodity environment, combined with operational efficiency measures, can provide strong momentum for the stock. Long-term investors may prefer to ride the commodity upcycle, while traders should prepare for short-term fluctuations.
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Investor Takeaway
Vedanta offers a rare mix of value and growth potential at current levels. With Nuvama projecting a 20% EBITDA CAGR and possible upside to target price if commodity prices remain elevated, the stock appears well-placed to benefit from the ongoing cycle. However, investors must also weigh risks of leverage and price volatility. A balanced approach with close monitoring of global commodity markets is recommended.
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SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
