Following the record-breaking fiscal year 2025, marked by the highest-ever double-digit profits and all-time high aluminium production, Vedanta Limited announces yet another positive outlook for FY2026. The company anticipates its aluminium business to emerge as the most profitable segment in the coming year, with margins exceeding USD 1,000 per tonne level compared to the current USD 850 per tonne.
Image source: Vedanta Aluminium
With full conviction, Chief Financial Officer Ajay Goel said, "Our focus remains on aluminium. We are working on volume augmentation and cost completion."
Vedanta's focus on the aluminium business is also indicated by its plans to allocate a major share of increased capex into the aluminium and power segment. Out of USD 1.7 billion capex budgeted for FY2026, Vedanta plans to earmark USD 700 million for its aluminium and power business.
According to Goel, the projected margin increase from USD 850 to over USD 1,000 per tonne is also expected to enhance Vedanta's EBITDA. But what makes the company have this bullish outlook amid the ongoing economic upheaval? Their production expansion, operational efficiencies, improved cost management, and potential for higher sales volumes have led them to this optimistic forecast.
Besides, the downtrend in bauxite and alumina prices will further cushion Vedanta's margin growth, allowing the company to balance the proportion between raw material prices and aluminium product costs. Misra expects lower bauxite and alumina prices to reduce Vedanta's production cost by approximately 10 per cent.
Now, the succeeding question is: where will this expanded production originate? According to Misra, commissioning newly added capacities will play a central role in supporting the production increase. In addition, output from the Balco expansion project and capacity enhancements through debottlenecking initiatives at the Jharsuguda smelter in Odisha will further enhance Vedanta's aluminium production.
By the end of 2025, the company expects aluminium production capacity to reach 3 million tonnes per annum and alumina capacity to touch the 4 million tonnes benchmark. Regarding bauxite, the company's Sijimali bauxite mine is projected to be commissioned in Q2.
Goel projects the increased demand for aluminium in India and globally will let the company augment its business volume, supporting its earnings.
"Demand in India is growing at about 12% annually. Current spot aluminium prices are around $2,500 per tonne, and consensus suggests a rise to $2,750 per tonne, levels seen last year," Goel pointed out.
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