Vedanta Aluminium targets higher-value products as expansion shifts into growth phase

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Vedanta Aluminium is entering a new phase of growth as major expansion projects near completion and the company shifts its focus towards higher-value aluminium products and lower production costs, prompting brokerages to reaffirm positive outlooks following a strong first-quarter performance.

Brokerages including ICICI Securities, CLSA, Citi, Nuvama and Emkay have maintained bullish views on the recently listed aluminium producer, citing rising production volumes, cost optimisation initiatives and ongoing capacity expansion as key drivers of future earnings growth.

ICICI Securities initiated coverage on Vedanta Aluminium with a 'Buy' rating and a target price of INR 520 (USD 5.54), highlighting the company's transition from a capital expenditure-intensive phase towards improving operational efficiency and profitability.

Expansion projects shift focus towards operational growth

Having completed much of its recent investment cycle, Vedanta Aluminium is now focused on maximising production from its expanded assets while improving product mix and reducing operating costs.

The brokerage expects aluminium production to grow at a rate of around 9 per cent through FY28, supported largely by capacity additions at the company's BALCO operations.

Alongside higher production volumes, Vedanta Aluminium is increasing its share of value-added aluminium products while expanding backward integration to produce more of its own raw materials, a strategy aimed at reducing production costs and improving margins over the longer term.

The company reported EBITDA of INR 102 billion (USD 1.07 billion) during the recent quarter, representing a 135 per cent Y-o-Y increase, driven by higher aluminium prices and improved production volumes.

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Strong quarterly performance reinforces investor confidence

Vedanta Aluminium's financial performance continued to improve during the first quarter of FY27 following its listing after the demerger from Vedanta.

Consolidated net profit increased more than threefold Y-o-Y to INR 56.29 billion (USD 589. 69 million), while revenue from operations rose 46 per cent to INR 213.93 billion (USD 2.24 billion).

Total income reached INR 217.02 billion (USD 2.27 billion), with operating profit margin improving to 45 per cent from 26 per cent a year earlier. Net profit margin is also more than doubled to 31 per cent, while the company's net worth increased more than 86 per cent Y-o-Y to INR 304.41 billion (USD 3.19 billion).

Alongside its quarterly results, Vedanta Aluminium announced its first interim dividend of INR 8 (USD 0.084) per share for FY27, with August 5, 2026, fixed as the record date.

Cost discipline remains central to long-term growth

While the outlook for aluminium producers remains broadly supportive, brokerages said Vedanta Aluminium's ability to manage production costs will remain a key factor influencing its long term performance.

ICICI Securities projects the company's cost of production to decline to around USD 1,682 per tonne by FY28, although fluctuations in raw material and energy prices could continue to affect profitability. Like other aluminium producers, the company also remains exposed to global commodity price cycles, which can influence earnings and margins.

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