Vedanta Aluminium Metal
Lowest-cost aluminium in a deficit
- Last close
- ₹434.45
- 29 Sept 2026 · reference
- 1D · 1M
- +3.4% · −4.8%
- price-only
- Weight
- 2.2%
- 31 Jul 2026 · Aug rank 17
- Thesis review
- 8 Sep 2026
- Why We Own, p63
Approved description
Vedanta Aluminium Metal is India's largest primary aluminium producer (~50-60% of domestic output; 3rd largest globally ex-China) demerged from Vedanta Ltd effective 1-May-2026 and listed 15-Jun-2026. It runs the Jharsuguda smelter (464 kt in Q1FY27) and BALCO (168 kt), the Lanjigarh alumina refinery (being expanded from 3.5 to 5 mtpa) and ~4.5 GW of captive power; FY27 guidance is 2.6-2.7 mn t aluminium and 4.0-4.1 mn t alumina, with capacity reaching ~3.0 mtpa by FY28 after the 435 ktpa BALCO expansion. Value-added products were 62% of Q1FY27 output (target ~90%); hot-metal cost of production was $1,698/t in Q1FY27 (first quartile of the global cost curve).
- 01Lowest-cost, largest Indian producer with volume growth: FY27 guidance 2.6-2.7 mn t rising to ~2.9 mn t by FY28 (capacity 2.8 mtpa end-FY27, 3.0 mtpa end-FY28 via 435 ktpa BALCO expansion), while hot-metal CoP falls from $1,749/t (FY26) toward <$1,600/t by FY28 as Sijimali bauxite (9 mtpa, H2FY27), Kuraloi and Ghogharpalli coal mines commission.
- 02Earnings leverage to a tight aluminium market: LME averaged $3,571/t in Q1FY27, EBITDA/t reached $1,804 and margin 50%; Nuvama sees 29% EBITDA CAGR to ~Rs 41,900 cr by FY28E even on $3,000/t LME.
- 03Rapid deleveraging: net debt fell from Rs 33,013 cr (Mar-26) to Rs 29,532 cr (Jun-26), 0.9x EBITDA; Nuvama expects ~Rs 3,400 cr net debt (0.1x) by FY28; CRISIL/ICRA upgraded to AA+ Stable.
- 04Dividend yield: Rs 8/share first interim (~Rs 3,100 cr payout) with brokers expecting Rs 15/share in FY27-28 (~3.4% yield at Rs 439); screener TTM yield 1.82%.
- 05Valuation vs peers: 10.8x TTM and ~6.5x FY28E EV/EBITDA against Hindalco 11.0x (with Novelis drag) and NALCO 9.9x; consensus TP Rs 564 implies ~28% upside (BusinessToday, 30-Jul-2026).
Reference close, with results-period markers
- 1Q Jun-26 end · 30 Jun 2026
Quality score, technicals and Buoyant Score
Computing the scorecard…
Latest quarter · Q Jun-26
| Line (₹ cr) | Q Jun-26 | YoY | QoQ |
|---|---|---|---|
| Net Sales | 21,393 | — | +46.0% |
| Operating Profit | 10,299 | — | +134.8% |
| Net Profit | 5,629 | — | +216.1% |
Reported vs internal estimate: internal quarterly estimates are not in the supplied package; consensus feed not licensed. YoY/QoQ per PRD §12.5 (transitions, not %, on non-positive bases).
Position and valuation context
Commodity/cyclical preset: volumes, realisations, unit cost, mid-cycle earnings, leverage.
Sell-side targets are third-party views, not Buoyant's; the upside is recomputed on our reference close, so it differs from the figure printed at the broker's price date.
Valuation range
No headline target on this page; the book quotes the thesis and the risk rather than a target.
What we watch
- Commissioning of Kuraloi coal mine (Q2FY27), Sijimali bauxite and Ghogharpalli coal (H2FY27), lifting captive alumina to 87% by FY28 (Nuvama).
- Q2FY27 results (~Oct/Nov-2026) with second interim dividend; brokers expect Rs 15/share for FY27.
- Possible increase in import duty on aluminium/scrap (AAI request for 7.5-15%) and Indian index inclusion post-listing (June-2026 listing, ~Rs 1.7 lakh cr mcap).
- Aluminium price reversal: SMM sees the market in surplus by 2027 (0.7-1.4 mn t) as Indonesian smelters ramp; every $100/t on ~2.7 mn t is ~Rs 2,200 cr of EBITDA.
- Promoter leverage/encumbrance: 56.38% promoter stake is encumbered (non-disposal undertaking, not a pledge) as security for $1.75 bn of Vedanta Resources bonds due 2032-37; group cash needs may drive dividend/related-party decisions.
- Execution and cost: FY27 CoP guidance $1,650-1,700/t assumes coal/bauxite mines commission on time; West Asia conflict added $50-100/t in H1FY27; Rs 7,146 cr of Rs 27,203 cr approved capex still unspent.