Kotak Picks: Vedanta Rides Metal Upcycle, Zomato Eyes Blinkit Growth

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AuthorIshaan Verma|Published at:
Kotak Picks: Vedanta Rides Metal Upcycle, Zomato Eyes Blinkit Growth
Overview

Kotak Securities has issued BUY recommendations for Vedanta and Eternal (Zomato). The brokerage forecasts Vedanta will benefit from a rally in base metals and a planned demerger offering value unlock. For Eternal, analysts project strong growth for its quick-commerce arm Blinkit driven by store expansion and margin improvements, with specific Q3FY26 forecasts provided.

Vedanta: Riding the Metal Wave

Analysts at Kotak Securities are bullish on Vedanta, assigning a BUY rating with a price target of ₹780. The firm anticipates the company is best positioned to capitalize on the current upcycle in base and precious metals. Approximately 85% of its estimated FY27E EBITDA is derived from aluminum (50%), zinc (20%), and silver (15%). Capacity growth across its aluminum, zinc, and power divisions over FY2027–28E is noted as an additional earnings driver.

The proposed demerger into five entities, expected to commence in Q4FY26E and conclude by Q1FY27E, is anticipated to unlock value through higher multiples, particularly in the aluminum and power segments. Price escalations, driven by supply disruptions in copper and a supportive macro environment including a weakening U.S. dollar and anticipated Federal Reserve rate cuts, have boosted the entire base and precious metals complex. Global aluminum prices have risen 9% in CY-2026 and 26% year-on-year, with Vedanta's exposure to these key metals positioning it favorably.

Eternal (Zomato): Blinkit's Expansion Drive

The optimism extends to Eternal (Zomato), also rated BUY with a ₹400 target. Kotak Securities projects robust growth in food delivery gross order value (GOV) for Q3FY26, expected at ₹11,700 crore, a year-on-year increase of 18%. Simultaneously, the quick-commerce segment, Blinkit, is forecast to show significant expansion, with net order value (NOV) anticipated to surge 123% year-on-year, driven by aggressive store additions and improved throughput. Blinkit's contribution margin is expected to reach 4.9% of NOV, up 30 basis points sequentially, leading to a narrowed EBITDA loss.

While Blinkit's growth is partially impacted by GST rate revisions, Kotak Securities highlights that its profitability can further expand with increased ad monetization and a growing mix of mature stores. Management commentary on competitive intensity and discounting trends will be key monitorables. Despite these factors, Eternal is viewed as well-positioned for sustainable margins.

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