Motilal Oswal Financial Services remains bullish on Vedanta Aluminium Metal, citing favourable industry dynamics, company-specific structural drivers and a valuation gap with peers. The brokerage expects the company to enter a strong earnings inflection point.
The domestic brokerage reiterated its ‘Buy’ call on Vedanta Aluminium Metal shares with a target price of Rs 540 apiece, implying around 21% upside from the stock’s previous closing price of Rs 448 apiece. The stock gained over 1% to trade at nearly Rs 454 apiece on Wednesday morning.
In its latest report, Motilal Oswal said the company that demerged from parent Vedanta earlier this year is entering a strong earnings inflection point, with EBITDA projected to expand at around 18% CAGR over FY26-28. This is supported by a multi-year earnings growth runway, which is largely driven by three levers, including volume scale, integration-led structural cost reductions, and a rising value-added mix.
The global aluminium market is structurally tightening due to China's production cap, supply disruptions in Europe and Russia, and years of underinvestment outside China, Motilal Oswal noted. This, coupled with India's robust demand growth and significant import substitution opportunities, creates a favourable outlook for Vedanta Aluminium Metal, according to the brokerage.
It added that India offers an equally compelling long-term opportunity as domestic aluminium demand is expected to grow at an 8-9% CAGR and reach 8-8.5MT by FY30, driven by infrastructure development, electrification, automotive demand, renewable energy investments, and manufacturing growth. The country's persistent aluminium import dependence further creates a sizeable import substitution opportunity for domestic producers, it further said.
In Motilal Oswal’s view, Vedanta Aluminium's ongoing backward integration, rising contribution from VAP, and robust domestic demand outlook provide strong visibility on earnings growth and cash flow generation over the medium term. The brokerage forecasts the company’s consolidated revenue, EBITDA and PAT to expand at around 11%, 18% and 23% CAGR respectively over FY26-28, aided by volume growth, margin expansion, and increasing downstream contribution.
Vedanta Aluminium was the only large-cap stock among the four companies spun off from Vedanta under its mega demerger. It debuted at Rs 522 apiece on the NSE on June 15, surpassing its parent company in terms of market capitalisation.
After the market debut, the stock lost around 19% in a little over a month to hit a record low of Rs 423.15 apiece in late July. The stock has so far recovered over 7% since then.