Vedanta Aluminium up 4% after Emkay starts coverage with Buy; eyes 22% gain

Vedanta Aluminium share price target: Vedanta Aluminium was one of the four companies that demerged from Vedanta Ltd and was listed as a separate entity.

Vedanta Aluminium share price target: Vedanta Aluminium shares rose nearly 4 per cent on Thursday after Emkay Research initiated coverage with a 'Buy' rating. The stock opened at ₹453.10 and touched a high of ₹469.40 on the National Stock Exchange (NSE).

 

The brokerage said that Vedanta Aluminium offers an attractive risk-reward on "favourable industry fundamentals and company-specific cost improvements". It values the company at 6.0x FY28E EV/Ebitda and has assigned a target price of ₹550. The target offers an upside of 22 per cent from th previous close of ₹452.

 

Vedanta Aluminium was one of the four companies that demerged from Vedanta Limited and listed as a separate entity. Vedanta Aluminium shares listed at ₹522 on the NSE and ₹527 on the BSE on June 15. 

 

 

Emkay in its report said that the market is yet to fully appreciate the company's structural earnings potential, which will be supported by a favourable global aluminium outlook. The brokerage remains constructive on the medium-term aluminium outlook, with the global market likely to remain in deficit through CY28 despite Indonesia's announced capacity additions (execution bottlenecks) and China's production cap. 

 

It said that Indonesia's ambitious capacity expansion has emerged as a key market concern, and believes that execution risks across bauxite availability, alumina refining, power infrastructure, and project financing will result in a much more gradual supply ramp-up. Concurrently, China's production is nearing its effective 45 mt capacity ceiling, limiting incremental supply. 

 

At the same time, Emkay sees a strong structural demand outlook for aluminium, supported by a structurally tight supply-demand balance. 

 

"Demand continues to be supported by grid infrastructure, energy transition, and automotive lightweighting," the brokerage said, adding that the deficit through CY28 will support aluminium prices at structurally higher levels and provide a favourable earnings backdrop for low-cost integrated producers. 

 

Vedanta Aluminium's next phase of earnings growth will increasingly be driven by structural cost improvements rather than aluminium prices alone. The company is executing a comprehensive backward integration strategy across bauxite mining, alumina refining, captive coal, and power, while simultaneously expanding its smelting and refining capacities.

 

"This should materially reduce dependence on third-party raw materials, lower  input cost volatility, and enhance operating leverage," Emkay said, while noting that the company is well-positioned to improve alumina self-sufficiency and structurally reduce cash costs. 

 

Combined with disciplined capital allocation and strong cash flow generation, Emkay expects these initiatives to support sustained deleveraging, improve return ratios, and strengthen the company's position as one of the lowest cost, fully integrated aluminium producers globally.    ============================================= 

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