Vedanta Aluminium shares slip into the red after 3% early rally; what CITI analysts said

Shares of newly listed Vedanta Aluminium Metal rallied nearly 3% in the early trade on Thursday, June 18, as leading financial services firm, CITI, has initiated coverage on the stock, citing a favourable aluminium market outlook, growth opportunities, and improving balance-sheet metrics.

The stock advanced as much as 2.93% to ₹479 apiece on the NSE in the early session. However, the stock slipped into the red later in the trade.

The investment firm has also placed the stock on a 90-day positive catalyst watch, reflecting its expectation of near-term triggers that could drive further gains.

According to analysts at CITI, Vedanta Aluminium stands to benefit from a constructive outlook for aluminium prices, capacity expansion initiatives, cost optimisation measures, and improved leverage.

The investment firm expects the company to transition to a net cash position by FY28, compared with a net debt-to-EBITDA ratio of 1.3x as of March 2026.

A net cash position means a company has more cash and cash equivalents than total debt on its balance sheet.

Key details

CITI highlighted growth potential from the expansion of Bharat Aluminium Company (BALCO) and debottlenecking efforts at Vedanta Aluminium Ltd. It also expects higher captive alumina production, increased use of domestic bauxite, and greater reliance on captive coal to support cost efficiencies.

The investment bank said its commodities team expects aluminium prices to average $3,700 per tonne in CY27 and $3,800 per tonne in CY28. While aluminium prices recently came under pressure following news of a US-Iran memorandum of understanding, CITI believes the global aluminium market remains in deficit and inventories are likely to decline sharply over the next three to six months.

As a result, the investment firm expects aluminium prices to rise 15-20% from current levels of around $3,400 per tonne to nearly $4,000 per tonne in its base-case scenario.

Aluminium industry

CITI said the aluminium industry is experiencing one of its biggest supply shocks in history, with smelters expected to take between six and 18 months to ramp up production. During this period, demand is expected to continue growing, supporting higher prices.

The financial services firm added that easing geopolitical concerns following the US-Iran understanding could improve the demand outlook, further strengthening its bullish stance on the commodity.

According to CITI, every $100-per-tonne movement in London Metal Exchange (LME) aluminium prices can impact Vedanta Aluminium's EBITDA by 4-5.5% and alter the stock's fair value by around ₹30 per share.

CITI analysts note that Vedanta Aluminium stands to benefit from a combination of higher aluminium prices, volume growth, and a lower-cost operating environment, which could support earnings growth over the medium term.

Vedanta Aluminium is one of India's largest aluminium producers and operates manufacturing facilities in Odisha and Chhattisgarh. The company was demerged from Vedanta Ltd and listed as a separate entity in 2026.

Aluminium is used across a wide range of industries, including transportation, construction, electrical equipment, packaging, aerospace, and consumer goods. The metal is also expected to play an important role in emerging sectors such as electric vehicles, renewable energy, and energy storage due to its lightweight and recyclable properties.

Vedanta Aluminium produces primary aluminium and related products, supported by captive raw material and power assets. The company is focused on expanding production capacity, improving operational efficiency, and reducing costs across its operations.