Vedanta Aluminium Metal Ltd. (VAML) shares climbed nearly 2.6% to Rs 455.95 on the BSE on Friday after Motilal Oswal Financial Services (MOFSL) initiated coverage with a Buy rating and a target price of Rs 540 per share. The target implies nearly 22% upside from the previous close, although the upside narrowed after Friday’s price rise.
The brokerage call has drawn attention because it combines a near-term price target with a longer-term aluminium demand story linked to infrastructure, electric vehicles, power transmission, and import substitution.
| Parameter | Detail |
|---|---|
| Brokerage | Motilal Oswal Financial Services |
| Rating | Buy (Initiating coverage) |
| Target Price | Rs 540/share |
| Implied Upside | ~22% (from previous close) |
| Valuation basis | 5.4x EV/EBITDA on FY28E, SoTP method |
Source: Motilal Oswal Financial Services
Why Motilal Oswal Is Bullish on Vedanta Aluminium
MOFSL called VAML one of the most compelling structural stories in the global aluminium space and said the company is approaching a significant earnings inflection point.
It expects three forces to drive growth in tandem: volume expansion, structural cost reductions, and a rising share of value-added products (VAP).
The brokerage also flagged a structurally tightening global aluminium market, driven by China’s production cap, supply disruptions in Europe and Russia, and years of underinvestment outside China, alongside robust Indian demand and import-substitution potential.
| Trigger | Why It Matters |
|---|---|
| Volume expansion | Capacity to rise toward 3 MTPA by FY28-exit; volumes to grow ~6% CAGR to 2.8 MT |
| Cost reduction | Captive raw material and power to support margins |
| Value-added products | VAP mix to rise from 71% to 90%, lifting realizations |
| Domestic demand | India’s aluminium consumption remains a structural tailwind |
| Global supply tightening | China’s production cap and supply issues may support prices |
Source: Motilal Oswal Financial Services
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Financial Growth Trajectory: FY26-28E
MOFSL forecasts consolidated revenue, EBITDA, and PAT to grow at roughly 11%, 18%, and 23% CAGR, respectively, between FY26 and FY28, aided by volume growth, margin expansion, and a bigger downstream contribution. Strong operating cash flow of nearly Rs 47,000 crore over FY26-28E is expected to fund the remaining capex while supporting faster deleveraging, with net debt/EBITDA seen falling below 1.5x.
| Metric | FY26-28E Estimate |
|---|---|
| Revenue CAGR | ~11% |
| EBITDA CAGR | 18%+ |
| PAT CAGR | ~23% |
| Operating cash flow (FY26-28E) | ~Rs 47,000 crore |
| Net debt/EBITDA | Below 1.5x by FY28 |
| Target price | Rs 540 |
Source: Motilal Oswal Financial Services
Backward Integration and Raw Material Security
A core pillar of the bull case is VAML’s push toward full self-sufficiency in bauxite and coal, its two most critical inputs. The company has secured a bauxite mine with 300 million tonnes (MT) of reserves and five coal mines with combined reserves of 1,048 MT.
The Sijimali bauxite mine is expected to start operations in the second half of FY27 and reach full capacity by FY28, while captive coal production capacity is projected to jump from 2.6 MTPA currently to over 40 MTPA by FY28-29.
Power Cost Advantage
Power typically accounts for 30-40% of total aluminium production costs, making captive generation a key cost lever. VAML operates nearly 4.5 GW of captive power capacity across its Jharsuguda and BALCO facilities, alongside ongoing renewable energy integration, a combination MOFSL believes strengthens the company’s position on the global cost curve.
About Vedanta Aluminium
VAML became an independent listed entity after Vedanta Ltd’s demerger took effect on May 1, 2026, and began trading on the NSE and BSE from June 15.
The company currently produces around 30 lakh tonnes per annum (LTPA) and has outlined plans to double capacity to 60 LTPA to meet rising demand from infrastructure, automotive, and electrification sectors.
VAML already contributes close to 50% of India’s aluminium output and serves customers in more than 60 countries.
Stock Price Action Today
Shares opened higher and were trading around 2.6% up at Rs 455.95 on the BSE, swinging between an intraday low of Rs 445 and a high near Rs 456. The stock’s market capitalisation stood at approximately Rs 1.79 lakh crore at the time of writing.
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Key Risks Flagged by MOFSL
MOFSL cautioned that execution risk, aluminium price volatility, input cost inflation, and trade-related challenges remain the key risks to its bullish thesis on the stock.
Bottom Line
MOFSL’s Buy call rests on a straightforward thesis: VAML is scaling into a larger, more integrated, and lower-cost aluminium producer at a time when global supply is tightening and India’s demand is rising. If execution stays on track, the brokerage sees the stock advancing toward its Rs 540 target, though returns will still hinge on commodity prices and project timelines.
Key Takeaways
- MOFSL initiates coverage with Buy, TP Rs 540 (~22% upside from previous close)
- Shares up ~2.6% on the day of the call, near Rs 456
- Revenue/EBITDA/PAT to grow ~11%/18%/23% CAGR over FY26-28E
- Smelting capacity to hit 3 MTPA by FY28 exit; long-term target 60 LTPA (6 MTPA)
- Full bauxite-coal self-sufficiency and 4.5 GW captive power support cost edge
- VAP mix to rise from 71% to 90%, lifting realizations
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Disclaimer: This article is for informational purposes only and does not constitute investment advice. Please consult a qualified financial advisor before making investment decisions.
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