# Here's why Motilal Oswal sees 34% upside in Vedanta Aluminium despite cutting target price — retained record

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Here's why Motilal Oswal sees 34% upside in Vedanta Aluminium despite cutting target price
- Published OnOct 29, 2026 | 06:48 IST
- Last Updated OnOct 29, 2026 | 06:48 IST
Vedanta Aluminium is targeting sharp production cost reductions through backward integration and expanding captive alumina supplies, even as near-term expenses rise due to planned power plant shutdowns. Analysts expect earnings to surge on higher output and robust domestic demand. Can upcoming regional capacity expansions in West Asia threaten global metal prices?
Shares of Vedanta Aluminium will be in focus on Thursday, October 29, after Motilal Oswal Financial Services retained its Buy rating on the stock but cut its target price to ₹480 per share from ₹500 earlier,
The revised target implies an upside of about 34% from Wednesday’s closing price of ₹359. The global investment firm said the company’s long-term growth outlook remains intact, supported by higher volumes, backward integration and a rising share of value-added products.
Vedanta Aluminium reported revenue of ₹22,324 crore in the September quarter, up 4.4% year-on-year (YoY), while net profit declined 6% to ₹6,187 crore. EBITDA fell 1.8% to ₹10,113 crore, and the EBITDA margin contracted to 45.3% from 48.1% a year earlier.
Production remained strong. Aluminium output reached a quarterly record of 649 kilotonnes, up 5% year-on-year, while alumina production rose 37% to a record 895 kilotonnes.
In its October 28 research note, Motilal Oswal said Vedanta Aluminium’s September quarter performance was supported by higher volumes and favourable London Metal Exchange (LME) prices.
The firm expects earnings before interest, taxes, depreciation and amortisation (EBITDA) to grow at a compound annual growth rate of around 22% between FY26 and FY28, driven by production growth, lower costs from integration initiatives and an improved product mix.
The stock trades at 4.2 times its estimated enterprise value to EBITDA for FY28, according to the note.
Cost savings and integration key to outlook
Motilal Oswal said management expects hot metal cost of production to decline to around $1,550 per tonne after key integration initiatives are completed, down $150-$175 per tonne from first-half FY27 levels. The company expects savings of around $100-$125 per tonne by the end of FY27, with the remaining savings likely over the following one to two quarters.
However, costs are expected to rise around 4% sequentially in the December quarter due to planned power plant shutdowns and higher carbon costs, before moderating in the March quarter. Overall costs in the second half of FY27 are expected to remain broadly in line with, or slightly below, first-half levels.
The company also expects its captive alumina mix to increase to around 85% by the end of FY27, supported by higher refinery output, expanded supplies from Odisha Mining Corporation and the start of production at the Sijimali bauxite mine. The mine could generate savings of around $25 per tonne compared with imported bauxite, according to the report.
Value-added products and expansion plans
Motilal Oswal said Vedanta Aluminium aims to increase the share of value-added products to more than 90%, supported by higher foundry alloy and billet production and greater domestic sales.
The company is also progressively ramping up the third potline at Bharat Aluminium Company, targeting a full-capacity run rate of around 435 kilotonnes per annum by March 2027. Management expects alumina production to rise around 10% in the third and fourth quarters of FY27, reaching rated capacity by the end of the financial year.
According to the research firm, Indian aluminium demand remains strong, supported by power, transportation and lightweighting applications. Management sees domestic aluminium demand growth potential at about 40% between calendar years 2025 and 2030.
The report also cautioned that additional supply from West Asia and Indonesia could put pressure on aluminium prices in the latter part of FY27 if regional operations normalise.
Shares of Vedanta Aluminium closed 1.4% higher at ₹359 ahead of the earnings announcement on Wednesday. The stock has declined about 28% so far in 2026.
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