Vedanta Aluminium (VEDO.BO): Initiate at Buy Post Demerger: LME, Growth, Cost Upside; Positive CW

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Vedanta Aluminium (VEDO.BO): Initiate at Buy Post Demerger: LME, Growth, Cost Upside; Positive CW

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17 Jun 2026 06:01:33 ET │ 17 pages

Vedanta Aluminium (VEDO.BO)

Initiate at Buy Post Demerger: LME, Growth, Cost Upside; Positive CW

CITI'S TAKE

We initiate Vedanta Aluminium, which was demerged from Vedanta (Ved)

on 1 May 2026, with a Buy and a TP of Rs560. Drivers include 1) a positive

aluminium outlook, 2) growth potential (Balco expansion, VAL Buy

debottlenecking), 3) cost focus (higher captive alumina, domestic bauxite Catalyst Watch: Upside

and captive coal), and 4) improving leverage – we expect a net cash position

Price (16 Jun 26 15:30) Rs475.65by FY28E (net D/EBITDA 1.3x at Mar26). We incorporate FY27/FY28

aluminium at $3,400 (spot $3,350). Every $100/t change in LME impacts Target price Rs560.00

EBITDA 4-5.5%, fair value by ~Rs30/sh. Vedanta Aluminium is now our top Expected share price return 17.7%

India metals pick. We open a 90-D positive CW: Our commodities team

Expected dividend yield 2.1%believes the aluminium market is in deficit and will draw inventories sharply

over the next 3–6 months, driving prices up 15–20% to $4k/t in base case. Expected total return 19.8%

Market Cap Rs1,857,012M

Target Price Rs560 — The NCLT approved Ved’s planned demerger into 5 separate US$19,606M

companies with mirror image shareholdings effective 1st May 2026. Vedanta

Aluminium listed on 15th June 2026, which we value (including its 51% stake in Balco)

at 6x Sep27E EV/EBITDA, the past 10-year average on consensus for close-comp

Hindalco. Hindalco has the advantage of Novelis’ converter business while Vedanta

Aluminium offers better imminent growth visibility (global peers trade at 4-6x). We Price Performance

incorporate FY27/28 aluminium LME at $3,400.