Vedanta shares surged 3% to hit a fresh 52-week high of ₹699 on Friday, driven by a rally in commodity prices on the London Metal Exchange. Copper prices bounced back to approach ₹13,407, while zinc prices also gained approximately 1%, providing strong momentum for the diversified metals company.

Brokerage Upgrades Target Price to ₹806

Nuvama Institutional Equities has revised Vedanta's target price upward to ₹806 from ₹686, representing an 18% upside potential from current market levels. The brokerage maintains Vedanta as a top pick, factoring in value unlocking from the demerger and estimating fair value under a FY28E sum-of-the-parts framework.

Demerger Approval and Structure

The NCLT approved the demerger last month to split Vedanta into five different listed entities. After the demerger, the base metals business will remain housed in Vedanta Ltd, while four new entities will be created: Vedanta Aluminium, Talwandi Sabo Power, Vedanta Steel and Iron, and Malco Energy. According to Nuvama, Vedanta is approaching completion of regulatory approvals required for the demerger.

Revised Financial Projections

Nuvama has significantly upgraded its financial estimates, revising FY27E and FY28E EBITDA estimates upward by 17% and 8% respectively to account for higher commodity prices. The brokerage projects a 20% CAGR in EBITDA over FY25-28E, reaching ₹724 billion.

Updated Commodity Price Assumptions

The INR-USD exchange rate assumption for FY27E and FY28E has been revised to 89 from 87.50 earlier, reflecting current market conditions.

Investment Thesis Strengthened

The brokerage expects strong commodity upcycle, cost optimization, and volume growth to reinforce Vedanta's investment thesis. With global supply deficits expected across metals in CY26, commodity prices are anticipated to remain structurally higher than historical averages. Higher commodity prices, aluminium cost reductions, and volume growth in international zinc and power operations are expected to drive the projected EBITDA growth.

Dividend Expectations Post-Demerger

Debt allocation across the demerged entities is expected to be judicious, ensuring comfortable servicing. Vedanta Aluminium (including 51% of Balco) and Vedanta Limited (housing Hindustan Zinc, International Zinc, and others) are likely to continue dividend payouts:

• Expected DPS of approximately ₹15 from Vedanta Aluminium in FY27E/28E
• Expected DPS of approximately ₹5 from Vedanta Limited in FY27E/28E

Market Performance and Analyst Coverage

Kotak Institutional Equities has assigned a target price of ₹780 per share, noting that Vedanta will benefit from the ongoing commodities rally. Nearly 85% of Vedanta's FY27E EBITDA is expected to be driven by aluminium (50%), zinc (20%), and silver (15%). At approximately 12:50 pm, shares were trading at ₹696, higher by 2.60% from the previous close.

Vedanta Ltd has established one of India's most comprehensive employee stock option programs, delivering a cumulative ₹2,500 crore financial impact to staff over the past five years through deeply discounted stock options. This approach is reshaping compensation standards in Indian manufacturing by extending equity participation beyond traditional senior management levels.

Latest ESOP Grant Expands Employee Ownership

The metals-to-oil conglomerate's newest initiative, ESOP 2025, carries a valuation exceeding ₹500 crore and brings nearly 1,200 employees into the company's shareholder base for the first time. The program allocates shares at Re 1, representing among the lowest exercise prices available in the Indian market.

Broad-Based Participation Model

Unlike conventional equity plans that typically focus on senior executives, Vedanta's ESOP structure covers nearly 40% of its workforce across plants, functions, and career levels. Fresh graduates and early-career professionals can receive allocations worth up to 30% of their fixed pay over the standard three-year vesting cycle, a practice uncommon among large Indian conglomerates.

The program extends equity participation to engineers, plant teams, and middle management—groups traditionally excluded from such compensation structures in the manufacturing sector.

Financial Performance and Employee Returns

The most recent completed vesting cycle, ESOP 2022, generated substantial returns for participating employees. The program delivered more than 80% share value appreciation, creating over ₹300 crore in employee wealth during that cycle.

Strategic Compensation Philosophy

Vedanta positions this equity-sharing approach as a core component of its compensation philosophy, developed through more than two decades of continuous ESOP administration. The company emphasizes the linkage between operational performance and employee rewards as a fundamental feature of its human resources strategy.

By placing equity ownership in the hands of operational staff and middle management, Vedanta aims to strengthen employee alignment as the company navigates volatile commodity markets and ongoing energy transition challenges. This broad-based ownership model represents a departure from traditional manufacturing compensation structures in India.