Vedanta Aluminium has received positive endorsements from multiple brokerages despite the stock declining more than 12 percent from its listing price since debuting as an independent entity. Analysts believe the company's long-term growth prospects remain intact, supported by favourable aluminium market dynamics, operational expansion and improving cost competitiveness.

CLSA has maintained an Outperform rating on the stock with a target price of Rs 540 per share, implying an upside of around 18 percent from its latest closing price. The brokerage highlighted the company's ongoing backward integration initiatives, which are expected to strengthen its cost leadership position and support profitability. CLSA also expects strong free cash flow generation to aid deleveraging efforts and support shareholder returns through dividends.

The brokerage further noted that Vedanta Aluminium's current valuation discount relative to global peers appears unwarranted given its growth outlook and cash generation capabilities.

The stock closed at Rs 456 on Tuesday, down 4.7 percent for the day and approximately 12.6 percent below its listing price of Rs 522. Vedanta Aluminium was listed on June 15 following the demerger of the aluminium business from the Vedanta group into a separately traded entity.

Kotak Institutional Equities recently initiated coverage on the company with a Buy rating and a fair value estimate of Rs 600 per share. The brokerage expects aluminium production volumes to grow at a compound annual rate of around 6 percent between FY2026 and FY2029, supported by capacity expansion projects. It also estimates that greater integration across bauxite and coal assets could reduce production costs by nearly $150 per tonne.

According to Kotak, the global aluminium industry is likely to remain supported by structural supply deficits, creating a favourable environment for aluminium prices and earnings growth.

Citi has also maintained a Buy rating on Vedanta Aluminium with a target price of Rs 560 per share. The brokerage expects aluminium prices to remain supported by supply constraints and forecasts average prices of $3,700 per tonne in 2027 and $3,800 per tonne in 2028. Citi believes any meaningful increase in global supply could take several months, potentially allowing aluminium prices to move higher from current levels.

The aluminium business has emerged as the most valuable entity within the Vedanta group's restructuring exercise. While analysts broadly view the company as a strong pure-play aluminium investment opportunity, they note that its performance will remain closely linked to trends in global aluminium prices and demand conditions.