Leading brokerage firm Geojit has assigned a 'Buy' rating to Vedanta Aluminium Metal Ltd (VAML) stock, projecting a 12-month target price of Rs 498. The positive outlook is primarily driven by the significant ramp-up of its Bharat Aluminium Company Ltd (BALCO) smelter expansion, which is now nearing full operational capacity.
Strong Q1 FY27 Performance Fuels Optimism
Vedanta Aluminium reported robust financial results for the first quarter of fiscal year 2027 (Q1 FY27). The company's consolidated revenue surged by an impressive 46 percent year-on-year (YoY) to Rs 21,393 crore. This growth was attributed to higher aluminium volumes, improved market realisations, and the successful ramp-up of the BALCO expansion.
Aluminium production at the BALCO facility saw a substantial 16.7 percent YoY increase, reaching 168 kilotonnes (kt) in Q1 FY27. Overall aluminium production for VAML rose 4.5 percent YoY to 632 kt, with production at the Jharsuguda facility holding steady at 464 kt.
Further supporting these figures, alumina production increased by 41 percent YoY to 826 kt, boosted by higher volumes from the expanded 3 million-tonne-per-annum (MTPA) refinery circuit. Despite a 3 percent sequential rise in the cost of production to $373 per tonne, partly due to fuel oil price pressures from the West Asia conflict, VAML demonstrated strong profitability.
Key Financial Highlights
- EBITDA: The company's Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) soared by 134.8 percent YoY to Rs 10,299 crore.
- EBITDA Margin: The EBITDA margin expanded significantly by 1,820 basis points (bps) to 48.1 percent.
- Profit After Tax (PAT): Profit after tax climbed an impressive 205.1 percent YoY, reaching Rs 6,597 crore.
Future Growth Drivers and Strategic Initiatives
Geojit's positive outlook for Vedanta Aluminium also considers several upcoming strategic initiatives and operational improvements. The brokerage anticipates the commissioning of the Sijimali bauxite mine following the monsoon season and the operationalisation of the Kuraloi coal block to further bolster the company's backward integration efforts.
Management has indicated plans for higher alumina production in the coming quarters and a strategic focus on increasing domestic market penetration through a greater mix of value-added products (VAP). Additionally, a proposed greenfield smelter expansion is expected to drive future capacity and volumes.
Geojit highlighted Vedanta Aluminium's commitment to deleveraging its balance sheet and its consistent generation of free cash flow as crucial factors supporting a strong long-term outlook for the company.
These combined factors underscore Geojit's confidence in Vedanta Aluminium's sustained growth trajectory and its recommendation for investors to consider a 'Buy' on the stock.