Chandigarh, Oct 08: Vedanta Aluminium Metal Ltd is entering the second half of FY27 with a strong operating and financial trajectory. The company made a record 649 kilo tonnes of aluminium in the July to September quarter, recording its highest ever quarterly production. Output for the first half of the year was also a record, at 1,281 kilo tonnes. Of the September quarter's output, 432 kilo tonnes left its plants as value-added products, which is about 67% of total production, or two in every three tonnes. The stated ambition is to raise value-added products to about 90% of its aluminium sales.
Value-added output rose by 103,000 tonnes over the year, more than three times the 32,000 tonne rise in total aluminium production. The company is moving a larger share of every tonne it makes into higher-value forms.
In Q1 FY27, the company had reported a Profit of ₹6,597 crore and declared a dividend of ₹8 per share, underscoring its strong earnings generation and commitment to shareholder returns.
Why the mix matters
Value-added products typically command a premium over ingots as they are engineered to meet specific customer and application requirements. A higher share of value-added products improves realisations and margins even when the underlying aluminium price is unchanged. In a favourable aluminium price environment, the combination of higher metal prices and a richer product mix provides additional earnings levers for the company. Vedanta Aluminium's range includes wire rods, billets, primary foundry alloys and rolled products.
Automotive, construction, electrical and other downstream industries are increasingly important buyers of differentiated aluminium products. In its Q2 production release, Vedanta Aluminium said it had strengthened its value-added production capabilities over the last two quarters, in response to accelerating demand from the Asian automotive segment and growing downstream demand in India. The automotive pull is shaping the company’s product pipeline too. The company recently launched two advanced alloys under its Primary Foundry Alloy range, a Copper-Doped Alloy and the Vedanta Foundry Alloy, developed with IIT Delhi. Both are built for carmakers' growing need for fuel-efficient, stronger vehicles across conventional and electric segments.
The shift also puts the company closer to one of the fastest growing sources of metal demand. AI runs in data centres, and every new facility needs power cables, cooling equipment, racks and enclosures, all of which use aluminium because it carries heat and electricity exceptionally well, is corrosion resistant, infinitely recyclable, light and costs less than copper. The bigger pull sits outside the building, in the power lines and grid upgrades needed to feed these sites, and overhead lines are made largely of aluminium conductors that start as wire rod. India's data centre capacity is forecast to grow from about 1.2 to 2.2 GW in 2025 to between 4 and 12 GW by 2030, depending on the estimate. Most of the cable, conductor and structure for that build-out will be bought locally, which favours a domestic producer.
The shift in product mix is taking place alongside an expansion in Vedanta Aluminium's underlying production capacity. BALCO's aluminium production increased 19% YoY to 178 kilo tonnes in Q2 FY27. During the quarter, BALCO also commissioned the second phase of its pioneering 525 kA smelter potline, taking operational capacity to 50% of the planned 435 kilo tonnes expansion.
What brokerages say
CLSA kept its Outperform rating on October 4, with a 12-month target price of Rs 540. That is about 34% above the stock's price. Geojit rated the stock Buy in September, with a 12-month target of Rs 498. It cited record value-added output as one reason, along with the BALCO ramp up and greater use of the company's own alumina. It noted that management plans to sell more value-added products in India.
