Vedanta Aluminium shares: Geojit assigns 'Buy' as BALCO expansion nears full capacity; check target

Brokerage Geojit assigned a 'Buy' rating to Vedanta Aluminium Metal Ltd's stock, setting a 12-month target price of Rs 498. The brokerage said the company's performance was supported by the ramp-up of its BALCO smelter, record value-added product (VAP) output and higher captive alumina utilisation.

According to Geojit, the expansion at Bharat Aluminium Company Ltd (BALCO) -- a unit of Vedanta Aluminium -- is nearing full capacity, with aluminium production at the facility rising 16.7 per cent year-on-year (YoY) to 168 kilotonnes (kt) in Q1 FY27. Overall aluminium production increased 4.5 per cent YoY to 632 kt from 605 kt, while production at the Jharsuguda facility remained stable at 464 kt.

Vedanta Aluminium's consolidated revenue rose 46 per cent YoY to Rs 21,393 crore in Q1 FY27, helped by higher aluminium volumes, improved realisations and the BALCO expansion ramp-up.

Alumina production increased 41 per cent YoY to 826 kt, driven by higher volumes from the expanded 3 million-tonne-per-annum (MTPA) refinery circuit. However, the cost of production rose 3 per cent sequentially (quarter-on-quarter) to $373 per tonne, partly due to fuel oil price pressures amid the West Asia conflict.

The company reported a 134.8 per cent YoY rise in EBITDA to Rs 10,299 crore, while its EBITDA margin expanded by 1,820 basis points (bps) to 48.1 per cent. Profit after tax (PAT) climbed 205.1 per cent YoY to Rs 6,597 crore.

Geojit outlook

Looking ahead, the domestic brokerage expects the commissioning of the Sijimali bauxite mine after the monsoon, operationalisation of the Kuraloi coal block, and targeted reductions in hot metal costs through backward integration to support the company's operations.

Geojit also highlighted Vedanta Aluminium's proposed greenfield smelter expansion as a potential driver of future capacity and volumes.

Management has guided towards higher alumina production in the coming quarters and aims to increase domestic market penetration through a greater mix of value-added products.

The brokerage also pointed to the company's deleveraging trajectory and free cash flow generation as factors supporting its long-term outlook.