Vedanta Aluminium Metal Ltd has received 'Outperform' rating from CLSA as the foreign brokerage initiated the coverage on the Vedanta group firm with a target of Rs 540, citing a higher for longer aluminium cycle and robust operational tailwinds. CLSA expects backward integration to lift Vedanta Aluminium into the first decile of global cost curve, along with near term volume growth visibility. 

"Strong FCF generation (even after assuming aluminium LME at a discount to spot) is likely to support deleveraging and dividend payout. Our TP of Rs 540 is based on 6x FY28CL EV/Ebitda. Every $100/T change in aluminium price impacts our valuation by 7 per cent," CLSA said.

The foreign brokerage said the aluminium upcycle is underpinned by resilient demand from electrification and substitution-led end markets, and constrained supply growth, resulting in a tight balance. 

"We expect incremental supply to remain modest at c.1.5mt/1.9mt in 2026/2027CL, largely driven by additions in Indonesia. Concentrated and volatile upstream inputs further elevate cost pressures and supply risks, supporting a higher for longer pricing environment," it said.

Another foreign brokerge Citi recently initiated coverage on Vedanta Aluminium with a 'Buy' and a target price of Rs560. It sees many drivers for Vedanta Aluminium including a positive aluminium outlook, growth potential, cost focus and 4) improving leverage. 

"We incorporate FY27/FY28 aluminium at $3,400 (spot $3,350). Every $100/t change in LME impacts Ebitda 4-5.5 per cent, fair value by Rs 30 per share. Vedanta Aluminium is now our top India metals pick. We open a 90-D positive CW: Our commodities team believes the aluminium market is in deficit and will draw inventories sharply over the next 3–6 months, driving prices up 15–20 per cent to $4k/t in base case," it said.

Kotak Institutional Equities also initiated coverage on the stock with a "buy' rating on June 17, suggesting a fair value of Rs 600. 

"The structural deficit in the aluminium market and elevated prices should further support earnings growth. Strong FCF should drive rapid deleveraging and higher shareholder returns. We initiate with a BUY rating and a Fair Value of Rs600 (7X March 2028E EV/Ebitda)," it said.