VEDANTA LTD (POST-DEMERGER) THE BULL CASE

June 2026

What happened: On May 1, 2026, Vedanta demerged into 5 independent entities. Aluminium, Oil & Gas, Power, and Steel are now separate listed companies. What remains under Vedanta Ltd (VEDL.NS) is a zinc-silver-copper powerhouse anchored by Hindustan Zinc.

The market has it wrong. Post-demerger Vedanta is trading at a discount to just one of its assets. Everything else is free.

WHAT RESIDUAL VEDANTA OWNS

- Hindustan Zinc (60.7% stake) World's largest integrated zinc producer, India's only primary silver producer. 25+ years of mine life.

- Zinc International (100%) Gamsberg, Black Mountain, Skorpion mines across South Africa and Namibia. Phase 2 expansion 94% complete, doubling capacity.

- Copper (100%) smelting operations. Tuticorin plant on the block for sale.

- FACOR/Nicomet and nickel. Critical minerals play with 10 blocks.

- Target: $5 billion EBITDA by 2030 (company guidance)

THE HIDDEN ARBITRAGE IS UNSEEN , BUYING A DOLLAR FOR 89 PAISE

- HZL market cap: ~₹2.40 lakh crore

- Vedanta's 60.7% HZL stake value: ₹1.46 lakh crore

- Vedanta's own market cap: ₹1.30 lakh crore

The entire company trades at an 11% discount to just its HZL holding. Zinc International, copper, ferro chrome, nickel, and 10 critical mineral blocks are priced at zero. This is not hyperbole. This is arithmetic.

HZL IS THE ENGINE ROOM

FY26 was a record year:

- Revenue: ₹40,844 crore (+20% YoY)

- EBITDA: ₹22,162 crore (+27% YoY)

- PAT: ₹13,832 crore (+34% YoY)

- EBITDA margin: 54% (up 300 bps)

- Q4 alone: EBITDA ₹7,747 crore (+61% YoY), PAT ₹5,033 crore (+68% YoY)

Operational excellence:

- Zinc cost of production: $903/tonne in Q4 lowest ever

- Silver production: 627 tonnes (record). Silver now contributes 45% of total profitability

- Refined metal: 1,052 kt

- FY27 silver guidance: 680 tonnes (+8%)

HZL isn't just a zinc company anymore. It's a silver company that also produces zinc. And silver at $78/oz with rising industrial demand (solar, electronics) is the tailwind nobody is talking about.

ZINC INTERNATIONAL = THE FREE OPTION

- FY26 mined metal: 225,000 tonnes (+27% YoY)

- Gamsberg Phase 2: 94% complete, commissioning Q1 FY27

- Capacity doubling to 500 KTPA post expansion

- FY26 EBITDA: ~₹1,700-2,100 crore. Expected to double by FY28.

- ICICI Direct values this at ₹9,714 crore EV (5x EBITDA)

The market is assigning zero value to this business inside Vedanta. A doubling EBITDA trajectory with Phase 2 coming online is not zero.

CLEANEST BALANCE SHEET IN THE GROUP

Post-demerger debt allocation:

- Residual Vedanta net debt: ₹9,300 crore (only $1.1B)

- Net Debt/EBITDA: 0.4x is the lowest leverage among all Vedanta entities

- For context: Vedanta Aluminium has ₹32,700 crore, Vedanta Power has ₹7,500 crore

- Residual Vedanta is projected to reach near-zero debt by FY28

The old bear thesis was "too much debt." Post-demerger, that argument is dead.

DIVIDEND MACHINE (Target)

- HZL FY26 total dividends: ~₹14,000-15,000 crore

- Vedanta's 60.7% share: ₹8,500-9,100 crore per year

- HZL payout ratio: 30-50% of PAT. With record profits, sustained high dividends are likely.

- HZL alone has declared ₹11/share as first interim dividend for FY27 : Vedanta's share: ~₹2,821 crore from just that one tranche.

- Post-demerger, Vedanta retains more of this cash for itself rather than upstreaming to VRL parent.

VALUATION IS CHEAP FOR A 54% MARGIN BUSINESS !

- EV/EBITDA (consolidated): ~5.7x

- P/E (attributable): ~12.5x

- Net Debt/EBITDA: 0.4x

- ROCE: 32%

- Dividend yield: ~3.5%

For a business with 25+ years of mine life, 74% domestic market share in zinc, record margins, and near-zero leverage, 5.7x EBITDA is cheap. Global mining peers trade at 6-8x.

- Floor (current HZL stake value): ₹1.46 lakh crore market cap = ₹375/share

At ₹333, you're buying HZL at a discount and getting Zinc International, critical minerals, and a near-zero debt balance sheet for free. The ED noise is obscuring the cleanest post-demerger value play in Indian metals.