Leading global and domestic brokerages have initiated coverage on Vedanta Aluminium, underscoring confidence in the company’s market leadership, growth trajectory, improving cost competitiveness and ability to create significant shareholder value as a standalone listed entity.
Citi has assigned a Buy rating with a target of ₹560 per share, while Kotak Institutional Equities has assigned a fair value of ₹600 per share, implying potential upside of up to 30 per cent from current levels.
With about 2.9 million tonnes per annum (mtpa) of installed capacity and an estimated 62 per cent share of the domestic market, the company is well positioned to benefit from growing aluminium demand.
Kotak expects EBITDA and profit CAGRs of about 23 per cent and 33 per cent, respectively, and believes the company deserves a premium valuation given its strong free cash flow profile, visible volume growth and significant cost-reduction opportunities.
Citi expects EBITDA and profit CAGRs of about 15 per cent and 26 per cent, respectively, over FY26-FY29.
Capacity expansion and cost efficiency to drive growth
Both brokerages highlighted Vedanta Aluminium’s industry-leading growth runway, with capacity additions and debottlenecking initiatives expected to drive a volume CAGR of about 6% through FY29.
Citi expects captive alumina sourcing to increase to about 75 per cent by FY27, supported by the expanded Lanjigarh refinery and commencement of the Sijimali bauxite mine.
Kotak estimates that the commissioning of the 9 mtpa Sijimali bauxite mine and four key coal mines could reduce production costs by about $150 per tonne and enhance profitability.
Aluminium market outlook remains favourable
Citi expects the global aluminium market to remain in deficit and forecasts aluminium prices could rise to $4,000 per tonne.
According to Citi, every $100 per tonne increase in aluminium prices could increase Vedanta Aluminium’s EBITDA by about 4-5.5 per cent.
Kotak similarly expects the global aluminium market to remain structurally undersupplied through CY2029, supported by demand from electric vehicles, renewable energy, power infrastructure and data centres.
Long-term growth runway and financial outlook
Citi further forecasts a net cash position of about ₹10,900 crore by FY29.
Kotak believes Vedanta Aluminium’s aspiration to double capacity to 6 mtpa provides one of the longest growth runways in the global aluminium industry, while Citi expects revenue to nearly double over the next three years, crossing ₹1.8 lakh crore by FY29.
Vedanta Aluminium commenced trading on stock exchanges on June 15, following the demerger of Vedanta into separate sector-focused listed entities.