Vedanta Aluminium Shares Surge as Brokerages Issue Bullish Calls, Assigning High Target Prices

Vedanta Aluminium Shares Surge as Brokerages Issue Bullish Calls, Assigning High Target Prices​

Vedanta Aluminium shares registered a significant surge on Monday, hitting the 5 percent upper circuit limit. The gain comes amid continued positive sentiment from brokerage houses who are reinforcing their 'Buy' ratings and significantly increasing price targets for the pure-play aluminium producer.

The stock settled at Rs 480.65 per share on the NSE, marking a strong rebound after two consecutive sessions of declines where the shares had previously fallen more than 2 percent. This movement highlights mounting investor confidence in the company's operational efficiencies and sector fundamentals.

Analyst Consensus: Kotak Justifies Premium Valuation for VAML​

Kotak Institutional Equities initiated coverage on Vedanta Aluminium with a 'Buy' rating, assigning a fair value of Rs 600 per share. The brokerage firm believes that this premium valuation compared to its peers is entirely warranted due to multiple strategic advantages within the company structure.

According to Kotak’s latest research report, these key drivers include high free cash flow (FCF) yield and strong volume growth levers expected over the next three years. Furthermore, attractive potential from brownfield expansions underpins the bullish forecast.

The brokerage highlighted that VAML is well-positioned due to its sector-leading volume expansion and accelerating backward integration across bauxite and coal mines. This focus on vertical integration is anticipated to reduce costs by around $150 per tonne.

Citi Forecasts Sustained Supply Deficits in Aluminium Market​

Citi also maintained a positive outlook, retaining a 'Buy' rating for Vedanta Aluminium with a target price set at Rs 560 per share. The brokerage maintains that global aluminium prices will remain structurally supported despite recent weakness and cyclical volatility in the market.

Citi’s analysis points to persistent supply deficits remaining within the market, suggesting that any recovery of supply could take between six and eighteen months. Currently trading near $3,400 per tonne, Citi estimates that aluminium prices have the potential to rise to around $4,000 per tonne eventually.

The firm forecasts aluminium prices to average approximately $3,700 per tonne in calendar year 2027 and projected at $3,800 per tonne for calendar year 2028. This fundamental deficit is expected to support robust earnings growth for the company.

Stock Performance Against Listing Price​

The current movement comes after Vedanta Aluminium shares were listed on June 15 following the Vedanta group's demerger. At Monday’s closing level of Rs 480.65, the stock was priced about 7.9 percent lower than its initial listing price of Rs 522.

Both Kotak and Citi have underscored that structural deficits in the aluminium market combined with strong operational management are expected to drive the business forward. The industry backdrop remains supportive for companies capable of executing on cost reduction and capacity expansion plans.