Kotak Institutional Equities maintained its “buy” rating on Vedanta Aluminium with a price target of ₹540.
The brokerage said that the market is underestimating the durability of the aluminium upcycle as well as Vedanta Aluminium’s earnings growth potential.
Ongoing concerns around a large supply wave from Indonesia remain overdone, according to Kotak, with project execution challenges likely to limit capacity additions and keep global markets tight all through calendar year 2028, the Kotak note stated.
It is against this backdrop, that Vedanta Aluminium is well positioned to deliver sector-leading volume growth, ensure cost reduction from backward integration and a strong free cash flow yield of 12% and 13% in financial year 2027 and 2028, according to the brokerage.
According to Kotak’s scenario analysis, the risk-reward for Vedanta Aluminium is attractive, even in a bear case commodity assumption.
Vedanta Aluminium shares began trading on the bourses on June 15 this year, debuting at a price of ₹522 on the National Stock Exchange and ₹527 on the Bombay Stock Exchange (BSE). The stock currently trades well below those levels.
Vedanta Aluminium was part of the Vedanta demerger with the other three demerged entities being Iron & Steel, Oil & Gas, and Power.
The stock has the highest coverage of analysts among the demerged entities, with 10 out of the 11 analysts covering it having a “buy” rating on it, with a solitary “sell” recommendation. The consensus estimates of price targets also implies an upside potential of 31% from current levels for Vedanta Aluminium.
Shares of Vedanta Aluminium Metal are trading 1.9% higher on Friday at ₹411.9. The stock is down 8% so far in the last one month.
