Vedanta Aluminum shares to see 22% rally? Motilal Oswal initiates coverage with Buy, lists key tailwinds

Motilal Oswal Financial Services initiated coverage on the shares of Vedanta Aluminum with a ‘Buy’ rating and a target price of Rs 540 per share, implying an upside potential of around 22% from the stock’s previous closing price, as the domestic brokerage forecast strong earnings growth and cash flow generation over the medium term.

The domestic brokerage in its note called the company India's largest pure-play primary aluminum company and the third-largest aluminum producer globally, excluding China. It said the company has emerged as one of the most compelling structural stories in the global aluminum space, combining industry-leading scale, extensive backward integration, and a multi-year earnings growth trajectory.

Vedanta Aluminum approaching earnings inflection point


Vedanta Aluminum is uniquely positioned to benefit from both favorable industry dynamics and company-specific structural drivers, according to the domestic brokerage, which highlighted that the Vedanta Group company is approaching a significant “earnings inflection point” as it expects EBITDA to post over 18% 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. This is further supported by India's robust demand growth and a substantial opportunity for import substitution,” Motilal Oswal said.

The domestic brokerage believes that the transition toward becoming more captive and backward integrated will support a structural re-rating of valuation multiples. However, key risks to its bullish call include execution risks, aluminum price volatility, input cost inflation, and trade-related challenges.

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Vedanta Aluminum share price

The shares of the company listed on stock exchanges at Rs 522 apiece on June 15 after the mega demerger of Vedanta that saw four new companies spinning out of it. The largecap company’s market capitalisation at debut stood at more than Rs 2 lakh crore, surpassing parent Vedanta’s total market capitalisation.

However, the stock then declined around 15% in less than a month to close at Rs 443.80 apiece on Thursday. The company currently has a market capitalisation of Rs 1.73 lakh crore.

Also Read | Vedanta Aluminium wipes off Rs 25,000 cr worth investor wealth in under a month. Time to buy?

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