Vedanta Aluminium share price: MOFSL sets 20% upside target, cites compelling structural story
Vedanta Aluminium is uniquely positioned to benefit from both favorable industry dynamics and company-specific structural drivers, MOFSL said.
- Jul 9, 2026,
- Updated Jul 9, 2026 9:24 AM IST
MOFSL has initiated coverage on Vedanta Aluminium Metal Ltd with 20 per cent upside target, calling it one of the most compelling structural stories in the global aluminium space. It cited industry-leading scale, extensive backward integration and a multi-year earnings growth trajectory to suggest a target of Rs 540 on the Vedanta group stock.
Vedanta Aluminium is uniquely positioned to benefit from both favorable industry dynamics and company-specific structural drivers, MOFSL said adding that the company is approaching a significant earnings inflection point, with Ebitda anticipated to post over 18 per cent CAGR over FY26-28.
"This growth will be driven by three simultaneous factors: volume expansion, structural cost reductions, and an increasing contribution from value-added products. Importantly, the global aluminum market is experiencing structural tightening due to China's production cap, supply disruptions in Europe and Russia, and years of underinvestment outside China," MOFSL said.
India's robust demand growth and a substantial opportunity for import substitution is seen further aiding the growth.
Vedanta Aluminium trades at 5.4 times EV/Ebitda on MOFSL's FY28 estimate. The brokerage initiated coverage on the stock with a BUY rating as it expects the transition towards becoming more captive and backward integrated will support a structural re-rating of valuation multiples.
MOFSL said Vedanta Aluminium is pursuing full self-sufficiency in bauxite and coal, the two most critical inputs for aluminum production. The company has secured a bauxite mine with 300 MT reserves and five coal mines with combined reserves of 1,048 MT. The Sijimali bauxite mine is anticipated to commence operations in 2HFY27 and reach full capacity by FY28. Captive coal production capacity is expected to increase from 2.6 MTPA currently to over 40 MTPA by FY28-29, MOFSL said.
"The share of value-added products (VAP) is targeted to improve further from 71% currently to 90% over the medium term, led by new downstream capacity additions. The improved VAP mix is likely to provide a notable uplift to realizations, margins, and return ratios," MOFSL said.
MOFSL said strong operating cash flow generation of nearly Rs 47,000 crore during FY27-28E should adequately fund the remaining capex requirements while supporting rapid deleveraging, with net debt/Ebitda expected to decline below 1.5 times. With most of the capex already incurred, the balance sheet deleveraging is likely to accelerate, MOFSL said.
"Key risks to our thesis include execution risks, aluminum price volatility, input cost inflation, and trade-related challenges," it said.
MOFSL has initiated coverage on Vedanta Aluminium Metal Ltd with 20 per cent upside target, calling it one of the most compelling structural stories in the global aluminium space. It cited industry-leading scale, extensive backward integration and a multi-year earnings growth trajectory to suggest a target of Rs 540 on the Vedanta group stock.
Vedanta Aluminium is uniquely positioned to benefit from both favorable industry dynamics and company-specific structural drivers, MOFSL said adding that the company is approaching a significant earnings inflection point, with Ebitda anticipated to post over 18 per cent CAGR over FY26-28.
"This growth will be driven by three simultaneous factors: volume expansion, structural cost reductions, and an increasing contribution from value-added products. Importantly, the global aluminum market is experiencing structural tightening due to China's production cap, supply disruptions in Europe and Russia, and years of underinvestment outside China," MOFSL said.
India's robust demand growth and a substantial opportunity for import substitution is seen further aiding the growth.
Vedanta Aluminium trades at 5.4 times EV/Ebitda on MOFSL's FY28 estimate. The brokerage initiated coverage on the stock with a BUY rating as it expects the transition towards becoming more captive and backward integrated will support a structural re-rating of valuation multiples.
MOFSL said Vedanta Aluminium is pursuing full self-sufficiency in bauxite and coal, the two most critical inputs for aluminum production. The company has secured a bauxite mine with 300 MT reserves and five coal mines with combined reserves of 1,048 MT. The Sijimali bauxite mine is anticipated to commence operations in 2HFY27 and reach full capacity by FY28. Captive coal production capacity is expected to increase from 2.6 MTPA currently to over 40 MTPA by FY28-29, MOFSL said.
"The share of value-added products (VAP) is targeted to improve further from 71% currently to 90% over the medium term, led by new downstream capacity additions. The improved VAP mix is likely to provide a notable uplift to realizations, margins, and return ratios," MOFSL said.
MOFSL said strong operating cash flow generation of nearly Rs 47,000 crore during FY27-28E should adequately fund the remaining capex requirements while supporting rapid deleveraging, with net debt/Ebitda expected to decline below 1.5 times. With most of the capex already incurred, the balance sheet deleveraging is likely to accelerate, MOFSL said.
"Key risks to our thesis include execution risks, aluminum price volatility, input cost inflation, and trade-related challenges," it said.