Vedanta Aluminium share price: Shares of demerged stock Vedanta Aluminium Metal Ltd (VAML) rose 3% in intraday trade on Thursday, June 18, for the first time since listing on 15 June. It snapped a two-session losing streak after two brokerages initiated coverage on the newly listed company with Buy ratings.
The stock had declined 1.2% and 5% in the previous two trading sessions, respectively. Thursday’s gains came after Citi and Kotak Institutional Equities began coverage, highlighting favourable aluminium market dynamics, capacity expansion plans and ongoing cost-efficiency measures as key growth drivers.
The brokerage optimism follows VAML’s blockbuster stock market debut. Shares of the demerged Vedanta Group company listed at ₹522 apiece on the NSE against a discovered price of ₹121.03, representing a premium of 331.3%.
Analysts remain constructive on the aluminium sector outlook, citing growing demand from electric vehicles, renewable energy infrastructure, data centres and copper substitution. At the same time, constrained global supply growth is expected to support aluminium prices over the medium term.
Why are brokerages bullish?
Kotak Institutional Equities initiated coverage on Vedanta Aluminium with a “Buy” rating and a fair value target of ₹600, implying an upside potential of 29% from current levels. According to the brokerage, the company is well positioned within India’s aluminium sector due to its scale, ongoing capacity additions and increasing backward integration.
Kotak expects Vedanta Aluminium to enjoy a longer growth runway than domestic peers, supported by new capacity creation and greater control over key raw materials. Based on recent capacity additions, Kotak expects Vedanta Aluminium’s volumes to grow at a compound annual growth rate (CAGR) of 6% during FY26-FY29. The brokerage also expects integration across bauxite and coal mines to lower costs by US$150 per tonne.
“The structural deficit in the aluminium market and elevated prices should further support earnings growth,” Kotak wrote, adding that strong free cash flow should drive rapid deleveraging and higher shareholder returns.
The brokerage forecasts EBITDA and profit after tax CAGR of 23% and 33%, respectively, during FY26-FY29. According to Kotak, the expected earnings growth could further strengthen the balance sheet and support the company’s next phase of expansion.
Meanwhile, Citi has also initiated coverage on Vedanta Aluminium with a Buy rating and a target price of ₹560. The brokerage cited a constructive aluminium price outlook, growth opportunities arising from capacity expansion, cost-reduction initiatives and improving balance-sheet metrics as key reasons behind its positive stance.
Citi’s commodities team expects the global aluminium market to remain in deficit, creating a supportive environment for aluminium prices. In its base-case scenario, the brokerage expects London Metal Exchange (LME) aluminium prices to move towards US$4,000 per tonne, implying a potential increase of 15-20% from current levels.
The brokerage estimates that every US$100 per tonne change in aluminium prices impacts Vedanta Aluminium’s EBITDA by 4-5.5%.
“What the US-Iran MoU has done is raise likely forward demand, increasing the commodities team’s bull conviction. Higher LME in a growing volume and lower cost environment should help Vedanta, in our view,” Citi said in its note.
The brokerage has therefore opened a 90-day “positive catalyst watch” on the stock.
Vedanta Demerger details
Anil Agarwal-led Vedanta Group’s demerger became effective on May 1 after receiving approval from the National Company Law Tribunal (NCLT). Under the restructuring plan, the group has been split into five separate entities — Vedanta Ltd, Vedanta Aluminium Metal Ltd, Vedanta Power Ltd, Vedanta Oil & Gas Ltd and Vedanta Iron & Steel Ltd.
Eligible shareholders received one fully paid-up equity share each of VAML, Vedanta Iron & Steel Ltd and Vedanta Oil & Gas Ltd, with a face value of Re 1, for every Vedanta share owned. They also received one fully paid-up equity share of Vedanta Power Ltd, with a face value of ₹10, for each Vedanta share held.
As part of the restructuring exercise, Vedanta’s stake in Bharat Aluminium Company Ltd (BALCO), along with certain aluminium-related non-convertible debentures (NCDs), has been transferred to Vedanta Aluminium Metal Ltd, strengthening the company’s position as the group’s dedicated aluminium business.
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.
