Vedanta Aluminium Eyes Next Growth Phase on Higher Volumes and Lower Costs

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Motilal Oswal has maintained its “buy” rating on Vedanta Aluminium Metal, saying production growth, lower costs and a bigger share of value-added products could support a multi-year expansion in earnings.

The brokerage has set a target price of INR 540 (USD 5.67) per share, implying potential upside from the stock’s recent level of about INR 451 (USD 4.73). Vedanta Aluminium shares were trading higher in Wednesday morning deals after gaining about 3 per cent over the previous week. 

Growth outlook drives bullish call 

Motilal Oswal expects Vedanta Aluminium’s revenue, EBITDA and profit after tax to grow at compound annual rates of about 11 per cent, 18 per cent and 23 per cent, respectively, between financial years 2026 and 2028.

The brokerage’s investment case rests on rising aluminium output, deeper backward integration and a larger contribution from value-added products. It also pointed to strong domestic demand and supply constraints in China, where aluminium production is limited by an output cap. 

Backward integration, including access to inputs and captive resources, can help aluminium producers manage costs. A higher contribution from value-added products, meanwhile, could support margins relative to the sale of primary metal alone.

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Earnings strengthen after the demerger

Vedanta Aluminium Metal reported its first quarterly results following its demerger from Vedanta Ltd, posting a consolidated net profit of INR 56.29 billion (USD 590.82 million) for the first quarter of financial year 2027. 

Revenue reached INR 213.93 billion (USD 2.25 billion), while EBITDA was INR 102.99 billion (USD 1.08 billion). The company’s quarterly performance has reinforced investor focus on its operating leverage to aluminium demand and prices. 

Motilal Oswal said the company was trading at about 5.3 times its estimated enterprise value to EBITDA for financial year 2028. Its INR 540 (USD 5.67) target is based on a sum-of-the-parts valuation. 

Related: Vedanta Aluminium’s next growth phase follows its USD 1.62 billion refinancing

Value-added aluminium remains in focus

Vedanta Aluminium recently introduced two advanced Primary Foundry Alloy products for automotive applications, signalling its push into higher-value aluminium segments. The company is aiming to benefit from growing domestic demand across automotive and other industrial applications. 

Other brokerages have also expressed a positive view. Systematix Institutional Equities has initiated coverage with a “buy” rating and an INR 598 (USD 6.28) target, while CLSA has an “outperform” rating with an INR 540 (USD 5.67) target, and Citi has set an INR 525 (USD 5.51) target. 

The differing targets underline that the broader market sees scope for earnings growth, while the stock’s performance will remain sensitive to aluminium prices, energy costs, execution on capacity plans and demand from end-use sectors.

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