Vedanta listing: Why its aluminium business is the undisputed crown jewel of the mega 4-way demerger

When four companies carved out of billionaire Anil Agarwal's commodities empire begin trading simultaneously on Monday morning, one will tower above the rest. Vedanta Aluminium Metal Limited (VAML), the pure-play aluminium spinoff, is poised to attract the lion's share of investor attention, drawing the biggest listing pop and carrying the strongest fundamental case in what analysts are calling a once-in-a-generation restructuring of one of India's most complex conglomerates.

The listing pop is expected to be the highest for the aluminium business, followed by the oil and gas unit, and the power division, experts said. The rare market event tests investor appetite for a restructured conglomerate aiming to capitalise on an anticipated supercycle in resources.

ICICI Securities, which has a Buy rating on Vedanta, called aluminium the new "crown jewel" of the group, ascribing it a sum-of-the-parts value of Rs 398 per share, the single largest contributor to the brokerage's target price of INR 855 for the combined entity. Zinc India, by contrast, was valued at Rs 323 per share after a 25% holding discount. "Aluminium follows as the new crown jewel," ICICI Securities analysts Vikash Singh and Pritish Urumkar wrote, adding they remain "most bullish on the aluminium segment, as the ongoing war could lead to a higher-than-expected aluminium supply deficit."

Also Read | Vedanta demerger: Which demerged stock should you buy after their market debut on June 15?

What’s so special about Vedanta Aluminium?

The investment case for Vedanta Aluminium Metal Limited, or VAML, rests on three pillars that are difficult to replicate: dominant domestic market share, a first-quartile global cost position, and a fully integrated value chain that is still being expanded.

As of March 31, 2026, the company's primary aluminium capacity stood at 2.88 million tonnes per annum, giving it a dominant domestic market share of 55-60% including the capacity of Bharat Aluminium Company Limited, or BALCO. ICICI Securities noted that Vedanta Aluminium is "poised to maintain its lead as the largest aluminium producer across the US, Europe, the Middle East, Australia and Africa," with a vision to double existing production capacity to 60 lakh tonnes per annum.

ICRA, which upgraded VAML's long-term rating to AA+ with a stable outlook last month, highlighted that the company's smelters are "positioned in the first quartile position in the global cost curve", a structural advantage that insulates margins during commodity downturns. The alumina capacity has been enhanced to 5 million tonnes per annum in FY2026 from 2 million tonnes, which is expected to meet a major portion of the group's alumina requirement and further strengthen cost competitiveness.

While the aluminium business will carry the maximum debt among the four demerged entities, it is also expected to generate the most EBITDA, a combination that results in a net debt to EBITDA ratio of approximately 1.3 times, lower than that of the power unit. This makes VAML's leverage profile more attractive than it appears at first glance.

ICRA noted that LME aluminium prices remained firm during FY2026 at an average of $2,771 per tonne, around 10% higher than the previous fiscal, and are expected to remain elevated in the near term given global supply-side constraints and the ongoing geopolitical situation. The aluminium segment reported a healthy OPBITDA of around Rs. 25,500 crore in FY2026, with the OPBDITA per tonne improving materially to approximately $1,158 per tonne. ICRA expects VAML's OPBDITA per tonne to exceed $1,250 per tonne in FY2027, with a total debt to OPBDITA ratio of less than 1.5 times and interest coverage of around 7.0 times.

VAML's cash and liquid investments stood at approximately Rs. 4,980 crore as of March 31, 2026, which ICRA described as adequate to meet medium-term commitments from robust operational cash flows.

Also Read | Vedanta listing: Aluminium, Power, Oil & Gas, Iron & Steel share trading starts Monday. Target price and what else to expect

Nifty Next 50 inclusion hopes

A critical near-term catalyst for VAML is its potential inclusion in key domestic indices. Nuvama Alternative & Quantitative Research, in a detailed note on index treatment post-demerger, estimated that Vedanta Aluminium is expected to enter the Nifty Next 50 index with a weight of approximately 3.4%, triggering passive inflows of around Rs 1,300 crore, by far the largest among the four demerged entities.

By contrast, Vedanta Power and Vedanta Oil & Gas are likely to be included only in the Nifty Smallcap 250 with weights of approximately 0.4% each, generating inflows of Rs 36 crore and Rs 33 crore respectively. Vedanta Steel & Iron Ore is "too small and does not qualify for major indices, implying negligible passive flows," Nuvama noted.

On AMFI market capitalisation classification, which determines mutual fund allocation mandates, VAML is expected to be categorised as a largecap, with a free-float market cap estimated at approximately Rs 75,444 crore. This places it alongside Vedanta Ltd in the large-cap bucket, while the remaining three entities fall into small-cap. "Mutual fund flows are likely to be skewed towards Vedanta Ltd and Aluminium," Nuvama's Abhilash Pagaria wrote.

Expansion pipeline and strategic bets

Capital expenditure projects nearing completion add further upside optionality. The BALCO smelting capacity was enhanced by 0.435 million tonnes per annum in September 2025, increasing consolidated smelting capacity to 2.8 million tonnes per annum. The alumina refinery expansion and the expected commencement of captive coal and bauxite blocks are expected to further reduce raw material cost volatility, ICRA noted.

In July 2025, VAML also announced a plan for a greenfield aluminium smelter project in Odisha at an estimated cost of approximately Rs. 1.3 lakh crore. ICRA noted that the project remains at a discussion stage with no firm capital commitment, and its phasing and funding mix will remain key monitorables. The company has also signed MoUs with downstream customers, including Singhal Steel & Power and SCOT-AL Metcon, for manufacturing facilities at the upcoming Vedanta Aluminium Park in Jharsuguda, which Vedanta's media brief described as "strengthening the manufacturing ecosystem."

The broader Vedanta Group's financial trajectory adds tailwind. ICRA upgraded the group's credit profile across entities last month, citing a sharp increase in base metal prices, with the group reporting an OPBDITA of $6.7 billion in FY2026. Even after proportionate consolidation of Hindustan Zinc, OPBDITA remained healthy at $5.7 billion, compared to approximately $3.8 billion in FY2025. Adjusted net leverage at the group level improved to 2.3 times in FY2026 and is expected to moderate to below 2.0 times going forward.

Vedanta Resources Limited's credit rating was separately upgraded to BB- by Fitch, as noted in the company's April 2026 media brief, reflecting a material improvement in the parent's refinancing risk profile.