Vedanta Aluminium eyes 194.7% Q1 profit growth as higher aluminium prices strengthen earnings

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Vedanta Aluminium Metal Ltd (VAML) is expected to report a strong set of results for the June quarter (Q1 FY27), with analysts forecasting a 194.7 per cent year-on-year rise in net profit, supported by higher aluminium prices, increased production and continued progress in backward integration. The recently demerged Vedanta Group company is also declared its first interim dividend of INR 8 (USD 0.084) per equity share for FY27. 

Kotak Institutional Equities estimates the company will report a net profit of INR 5,693.5 crore (USD 595 million), nearly three times higher than the INR 1,932.3 crore (USD 202 million) recorded in the corresponding quarter last year. Revenue is projected to increase 37.5 per cent year-on-year to INR 20,013.7 crore (USD 2.1 billion), compared with INR 14,556 crore (USD 1.5 billion) in Q1 FY26.

The brokerage expects EBITDA to rise 17.5 per cent sequentially and 123 per cent year-on-year, mainly because of stronger aluminium prices during the quarter. However, it noted that gains could be partly offset by the company's hedging positions.

Aluminium production is expected to reach 0.63 million tonnes during the quarter, representing a 6.8 per cent increase year-on-year and a 1.9 per cent rise from the previous quarter. The increase is expected to be driven by the ramp-up of new smelting capacity at Bharat Aluminium Company (BALCO).

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ICICI Securities believes Vedanta Aluminium is entering a period of structural earnings growth, supported by rising production, greater backward integration and a higher share of value-added products. The company has guided for a cost of production below USD 1,500 per tonne, supported by 100 per cent captive coal integration, 90 per cent captive alumina and 60 per cent captive bauxite.

The brokerage said, "We expect aluminium volumes to increase to 2.9 million tonnes in FY28, implying a CAGR of 9 per cent over FY26–28E.” It also expects greater use of captive alumina refineries, bauxite mines and coal mines to reduce exposure to raw material price fluctuations while lowering production costs by around USD 70 per tonne over the same period.

In addition, the proportion of value-added products (VAP) is expected to increase to 75 per cent from around 60 per cent currently. A larger share of value-added aluminium products generally improves product realisations and operating margins.

Although ICICI Securities did not publish a separate quarterly earnings preview, it projects Vedanta Aluminium's EBITDA to reach INR 38,900 crore (USD 4.1 billion) by FY28, representing a CAGR of 24 per cent over FY26-FY28. It also estimates EBITDA of USD 1,429 per tonne by FY28.

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Alongside its June quarter results, Vedanta Aluminium Metal declared its first interim dividend of INR 8 per equity share for the financial year 2026-27, amounting to approximately INR 3,128.55 crore (USD 327 million). The company has also scheduled its earnings conference call from 5:00 PM to 6:30 PM IST on July 30 following the results announcement. 

Brokerages remain broadly positive on the stock. During July, target prices ranged from INR 520 (USD 5.43) to INR 630 (USD 6.58) per share, with a consensus target of around INR 564 (USD 5.89), implying 28 per cent potential upside from current levels.

Market analysts also continue to monitor global aluminium fundamentals. Nuvama noted earlier, "The froth in aluminium prices fizzled out last month with expectation of easing of traffic at the Strait of Hormuz and resumption of supply from West Asia. They also stated, “ We believe full restoration of supply from West Asia shall happen by Q2FY28, and with incremental supply from Indonesia, the world aluminium market could turn into surplus in FY29."