Vedanta Aluminium Metal share price rallied over 2% in early trade on Wednesday after CLSA initiated coverage on the stock with a bullish view, expecting an 18% upside potential on the stock. Vedanta Aluminium shares gained as much as 2.46% to ₹469.00 apiece on the BSE.
Global brokerage firm CLSA assigned an ‘Outperform’ rating on Vedanta Aluminium Metal shares, with a target price of ₹540 apiece, based on 6x FY28CL EV/Ebitda. The target price implies an upside potential of 18% from Tuesday’s closing price.
The bullish view on Vedanta Aluminium has been supported by a higher for longer aluminium cycle and robust operational tailwinds. It expects backward integration to lift the company into the first decile of the global cost curve, along with near term volume growth visibility.
Additionally, strong free cash flow (FCF) generation is likely to support deleveraging and dividend payout, it added.
Citi assigns ‘Buy’
Earlier, Citi had initiated coverage on Vedanta Aluminium with a ‘Buy’ call and a target price of ₹560 per share, driven by a positive aluminium outlook, growth potential, cost focus and improving leverage. Citi expects a net cash position by FY28 for the company.
Citi believes the aluminium market is in deficit and will draw inventories sharply over the next 3-6 months, driving aluminium prices to $4,000 per tonne in its base case from $3,400 per tonne at present.
The supply shock is the biggest in its history, and smelters will take 6-18 months to ramp back up, during which time demand will keep growing, according to Citi analysts. The US-Iran peace deal has further raised forward demand expectations.
Higher LME in a growing volume and lower cost environment should help Vedanta, it said, adding that Vedanta Aluminium is now its top India metals pick.
Vedanta Aluminium Metal shares were listed on June 15 on the Indian stock exchanges along with three other group companies, after the demerger from its parent Vedanta Ltd. Vedanta Aluminium was assigned the highest valuation among the four demerged entities at the time of listing.
At 9:50 AM, Vedanta Aluminium share price was trading 0.50% higher at ₹460.00 apiece on the BSE.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
