Shares of Vedanta Aluminium fell on Thursday, October 29, after CLSA maintained its Outperform rating on the stock with a target price of ₹525, implying an upside of around 46% from Wednesday’s close of ₹359, while Motilal Oswal Financial Services retained its Buy rating but cut its target price to ₹480 from ₹500, indicating an upside of around 34%.
CLSA said Vedanta Aluminium’s Q2FY27 results were slightly ahead of expectations on lower costs. The firm expects the company to exit FY27 with an annualised earnings before interest, tax, depreciation and amortisation (EBITDA) run rate of $5 billion at spot aluminium prices, supported by smelter ramp-ups and cost-saving projects.
Motilal Oswal, meanwhile, expects EBITDA to grow at a compound annual growth rate of around 22% between FY26 and FY28.
Vedanta Aluminium reported revenue of ₹22,324 crore in the September quarter, up 4.4% year-on-year (YoY), while net profit declined 6% to ₹6,187 crore. EBITDA fell 1.8% to ₹10,113 crore, and the EBITDA margin contracted to 45.3% from 48.1% a year earlier.
CLSA flags expansion, valuation opportunity
CLSA said investors would focus on capital allocation and the next phase of expansion, including a proposed 3-million-tonne aluminium smelter targeted for the end of FY28.
The global investment firm said the current share price reflects an aluminium price assumption of $2,650 per tonne, compared with spot prices of around $3,100 per tonne, and a target valuation multiple of five times, against six times in its base case. At four times estimated FY28 attributable enterprise value to EBITDA, CLSA sees a free cash flow yield of 19%.
Motilal Oswal highlights cost savings and integration
Motilal Oswal said the September quarter was supported by higher volumes and favourable foreign exchange movements, partly offset by a sequential decline in London Metal Exchange (LME) aluminium prices.
The firm said management expects hot metal cost of production to decline to around $1,550 per tonne after key integration initiatives are completed. This would be $150-$175 per tonne below first-half FY27 levels. The company expects savings of around $100-$125 per tonne by the end of FY27, with the remaining savings likely over the following one to two quarters.
Costs are expected to rise around 4% sequentially in the December quarter due to planned power plant shutdowns and higher carbon costs, before moderating in the March quarter. Overall costs in the second half of FY27 are expected to remain broadly in line with, or slightly below, first-half levels.
Motilal Oswal’s note put blended aluminium cost of production at $1,722 per tonne in Q2FY27, down 6% year-on-year but up from $1,698 per tonne in the June quarter. Alumina cost of production stood at $378 per tonne, broadly flat year-on-year and sequentially.
Record production supports growth outlook
Aluminium output reached a quarterly record of 649 kilotonnes, up 5% year-on-year, while alumina production rose 37% to a record 895 kilotonnes.
Motilal Oswal said Vedanta Aluminium aims to increase the share of value-added products to more than 90%, supported by higher foundry alloy and billet production and greater domestic sales.
The company is progressively ramping up the third potline at Bharat Aluminium Company, targeting a full-capacity run rate of around 435 kilotonnes per annum by March 2027. Management expects alumina production to rise around 10% in the third and fourth quarters of FY27, reaching rated capacity by the end of the financial year.
The company also expects its captive alumina mix to increase to around 85% by the end of FY27, supported by higher refinery output, expanded supplies from Odisha Mining Corporation and the start of production at the Sijimali bauxite mine. The mine could generate savings of around $25 per tonne compared with imported bauxite, according to Motilal Oswal.
Aluminium demand and supply outlook
Motilal Oswal said management sees Indian aluminium demand growing around 40% between calendar years 2025 and 2030, supported by applications in power, transportation and lightweighting.
However, the firm cautioned that additional supply from West Asia and Indonesia could put pressure on aluminium prices if regional operations normalise.
Analysts view and stock movement
According to Bloomberg’s analyst consensus data, of 14 analysts covering Vedanta Aluminium, 13 have given it a Buy rating, and one has a Sell rating, with no Hold ratings. The 12-month consensus target price stood at ₹512.92, compared with the last price, implying a potential upside of around 43%.
Shares of Vedanta Aluminium were trading 1.14% down at ₹ 355.10 on Thursday. The stock has declined about 29% so far in 2026.