Shares of Vedanta Ltd climbed more than 5% in Wednesday’s trade, supported by fresh brokerage action, while JSW Steel Ltd advanced around 2% amid a pair trade recommendation from global brokerage Citi.
The rally follows Citi’s initiation of a tactical pair trade, assigning an “Overweight” rating to Vedanta and an “Underweight” rating to JSW Steel, citing valuation divergence and sector dynamics.
Citi Flags Limited Upside for JSW Steel
Citi noted that JSW Steel is currently trading at nearly 9 times its EV to EBITDA multiple. According to the brokerage, this valuation reflects optimism that extends beyond prevailing spot steel prices.The firm added that upside could be capped as domestic steel prices approach import parity levels. It also highlighted uneven capacity additions across the sector, which may weigh on incremental gains from current levels.
Vedanta Seen Benefiting From Demerger, Commodity Tailwinds
In contrast, Citi sees potential upside in Vedanta ahead of its proposed demerger. The brokerage values the company at 5.5 times its attributable EV to EBITDA, based on spot commodity prices of aluminum at $3,070, zinc at $3,325, and silver at $88.On this basis, Citi estimates an upside of around 15% in the stock.
BofA Upgrades Vedanta to Buy, Raises Target to ₹840
Separately, BofA Securities upgraded Vedanta to “Buy” from “Neutral” and sharply raised its price target to ₹840 from ₹480 earlier, implying a 75% increase in its target valuation.The upgrade is anchored in BofA’s constructive outlook on aluminum and supportive silver prices. The brokerage also pointed to Vedanta’s dividend yield of nearly 6% as an additional attraction for investors.
BofA further noted that significant deleveraging at the parent level lowers the risk of any increase in the brand fee rate on inter corporate loans.
Street View: Strong Analyst Backing
Vedanta continues to enjoy broad support from the analyst community. Fifteen analysts track the stock, of which eleven maintain a “Buy” rating and four recommend “Hold.” There are currently no “Sell” ratings on the counter.BofA’s ₹840 price target stands as the third highest on the Street, behind Citi’s ₹900 and the ₹898 target set by Systematix Group.
With both valuation comfort and commodity price support in play, Vedanta remains in focus as brokerage upgrades and corporate restructuring plans shape investor sentiment, while JSW Steel faces scrutiny over near term valuation assumptions.
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