THEBUSINESSBYTES BUREAU

NEW DELHI, OCTOBER 7, 2026

Vedanta Aluminium Metal Ltd is entering the second half of FY27 on a strong operating and financial footing, with two-thirds of its aluminium output now coming in the form of value-added products, signalling a sharper shift towards higher-margin metal even as production scales new records.

The company produced a record 649 kilo tonnes (kt) of aluminium in the July-September quarter, its highest-ever quarterly output, taking first-half (H1FY27) production to a record 1,281 kt.

More significantly, 432 kt of the September quarter's output was sold as value-added products, accounting for about 67 per cent of total production, or roughly two out of every three tonnes produced.

The company aims to increase the share of value-added products to about 90 per cent of its aluminium sales.

The transformation in product mix has outpaced the growth in overall production. Value-added output increased by 103 kt year-on-year, compared with a 32 kt rise in total aluminium production, indicating that a substantially larger proportion of every tonne produced is being converted into higher-value forms.

Value-added aluminium products typically command a premium over standard ingots as they are engineered to meet specific customer and application requirements. A richer product mix can therefore support higher realisations and margins even when underlying aluminium prices remain unchanged.

In a favourable aluminium price environment, the combination of higher metal prices and an increasing share of premium products could provide an additional earnings lever for Vedanta Aluminium.

The company's value-added portfolio includes wire rods, billets, primary foundry alloys and rolled products, catering to automotive, construction, electrical and other downstream industries.

Vedanta Aluminium, in its second-quarter production update, said it had strengthened its value-added production capabilities over the past two quarters in response to accelerating demand from the Asian automotive segment and growing downstream demand in India.

The automotive opportunity is also influencing its product development pipeline. The company recently launched two advanced alloys under its Primary Foundry Alloy range — a Copper-Doped Alloy and Vedanta Foundry Alloy — developed in collaboration with IIT Delhi.

The alloys are designed to meet automakers' growing requirements for stronger and more fuel-efficient vehicles across both conventional and electric vehicle segments.

The company's product-mix strategy also positions it to benefit from emerging demand linked to the rapid expansion of artificial intelligence and data-centre infrastructure.

AI-driven data centres require large quantities of aluminium for power cables, cooling equipment, racks and enclosures because of the metal's combination of electrical and thermal conductivity, corrosion resistance, light weight, recyclability and relatively lower cost compared with copper.

An even larger opportunity lies outside data-centre buildings, in the power transmission infrastructure required to supply them. Overhead power lines rely heavily on aluminium conductors, which begin as wire rod.

India's data-centre capacity is estimated to rise from around 1.2-2.2 GW in 2025 to between 4 GW and 12 GW by 2030, depending on the estimate. Much of the cable, conductor and structural material required for this expansion is expected to be sourced domestically, potentially benefiting local aluminium producers.

The shift towards value-added products is occurring alongside an expansion in the company's underlying production capacity.

BALCO, Vedanta Aluminium's subsidiary, increased aluminium production by 19 per cent year-on-year to 178 kt in the September quarter.

During the quarter, BALCO commissioned the second phase of its pioneering 525 kA smelter potline, taking operational capacity to 50 per cent of the planned 435 kt expansion.

The company's improving operating performance is also reflected in its financial profile. In the first quarter of FY27, Vedanta reported a profit of Rs 6,597 crore and declared a dividend of Rs 8 per share, underlining strong earnings generation and continued shareholder returns.

Brokerages have also remained positive on the company's outlook.

CLSA retained its 'Outperform' rating on October 4 and set a 12-month target price of Rs 540, implying an upside of about 34 per cent from the prevailing stock price.

Geojit had assigned a 'Buy' rating in September with a 12-month target of Rs 498. It cited record value-added output, the BALCO ramp-up and greater utilisation of the company's own alumina among the factors supporting its view. Geojit also noted that management plans to increase sales of value-added products in the domestic market.