Vedanta Aluminium Metal Ltd (VAML) Q1 FY27 Earnings Call: Guides Cost to $1,450-1,500/Tonne, Record Aluminium Output of 632 KT

Vedanta Aluminium Metal Ltd held its Q1 FY27 earnings call on July 30, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Record Revenue, EBITDA, and Profit in Q1 FY 2026-2027

• Revenue of Rs.21,105 crores — a record for Q1 FY 2026-2027, up 45% YoY and 13% QoQ, driven by higher aluminium prices and record production.
• EBITDA of Rs.10,499 crores — up 134% YoY and 24% QoQ, with EBITDA per tonne expanding to $1,804 from $1,511 sequentially.
• Profit after tax of Rs.6,597 crores — up over 200% YoY, reflecting operating leverage and cost discipline.
• ROCE of 42% at end of Q1 FY 2026-2027, with net debt-to-EBITDA improving to 0.9x and cash & equivalents exceeding Rs.6,000 crores.
• Board declared interim dividend of Rs.8/share for Vedanta Aluminium; CRISIL and ICRA upgraded the company to AA+ with stable outlook.

Record Aluminium Output, Alumina Growth, and Cost Trajectory

• Record aluminium production of 632 KT in Q1 FY 2026-2027, up 5% YoY and 3% QoQ; value-added product output hit 389,000 tonnes (+ 14% YoY) toward the 90% mix goal.
• Alumina production of 826 KT in Q1 FY 2026-2027, up 41% YoY but down 6% QoQ due to stabilization issues in the power plant, red mud filtration, and bauxite handling.
• Hot metal cost of $1,698/tonne in Q1 FY 2026-2027, down 4% YoY and 3% QoQ, within the full-year guidance band; cost guidance for FY 2026-2027 unchanged at $1,650–$1,700/tonne (Q2 FY 2026-2027 may be marginally higher due to planned power plant shutdowns during the monsoon).
• Alumina cost of $780/tonne in Q1 FY 2026-2027, down 3% QoQ, targeting $750/tonne in Q2 FY 2026-2027 on higher captive mix (70-72%) and lower API; further reduction toward $700/tonne depends on Lanjigarh ramp-up and captive bauxite.
• Management expects hot metal cost to decline $175-200/tonne from current levels over the next 3-4 quarters (by late FY 2026-2027 / early FY 2027-2028), driven by Lanjigarh refinery ramp-up to ~90%, captive bauxite from CG Malli, and Ghogharpalli coal mine benefits.
• Renewable energy supply from Serentica increased to 198 MW in Q1 FY 2026-2027, up 60% sequentially; management expects to exceed 371 MW of green power by end of FY 2026-2027.

Expansion Projects on Track: Balco, Mines, and Greenfield Aluminium

• Balco new potline produced 24 KT in Q1 FY 2026-2027, exceeding the plan of 22 KT; full production expected by end of Q2 FY 2026-2027. Balco's total expanded volume guided at 260-270 KT for FY 2026-2027 and 435 KT in FY 2027-2028.
• Kurloi mine expected to start in Q2 FY 2026-2027 (mining lease and mine opening permission received); Ghorgharpali coal mine under evaluation with no production estimates yet for FY 2026-2027 or FY 2027-2028.
• CGML captive bauxite mine targeting 1-2 mt in FY 2026-2027 and 6-7 mt in FY 2027-2028, subject to stage 2 forest clearance and mining lease expected within a few months; production post-monsoon in FY 2026-2027.
• New 3 MTPA greenfield aluminium expansion at drawing-board stage (land acquisition, technology partner finalization); board presentation expected in about a quarter, with heavy capex likely not before late FY 2027-2028 or FY 2028-2029. Estimated cost ~ $2,500/tonne (implying ~ $7.5 billion), phased over years.
• Total VAML capex for FY 2026-2027 guided at ~Rs.5,000 crore (Rs.2,000-2,500 crore for Balco, balance for Vedanta Aluminium). For FY 2027-2028, capex expected to moderate to Rs.3,500-4,000 crore as Balco capex largely completes.
• Sijimali bauxite mine awaiting consent to operate — sole regulatory approval pending; expected in Q2 FY 2026-2027, with mining to commence after the monsoon. An MDO partner has already been appointed.

Leverage Improvement, Rating Upgrades, and Dividend Policy

• VRL debt reduced from $10 Bn to $5 Bn over three years as of June 30, 2026; target to further reduce to $3 Bn (no specific timeline given). Leverage ratio expected to decline from 0.9x (Mar 2026) to 0.7x by March 2027.
• Vedanta India consolidated EBITDA guided at $9.5-10 Bn for FY 2026-2027 with cash conversion at ~90%, implying free cash flow of roughly $5 Bn (~Rs.45,000 crore).
• VAML net debt of Rs.33,000 crore (end of June, later clarified as Rs.29,500 crore post adjustments). Remaining capex on announced growth projects (Balco + Lanjigarh) is Rs.7,000-8,000 crore over the next 18-24 months.
• VRL refinancing program of $5 Bn targets reduction of ~ 280 bps in funding cost, aiming for annual interest cost savings of over Rs.1,000 crores. VRL raised $1.7 Bn from international bonds at an average 7.4% coupon (8.5-year maturity).
• Dividend payout policy post-demerger changed from prescriptive to descriptive; CFO Ajay Goel indicated expected normalisation toward 3-5% dividend yield on combined market capitalisation of five business units (~ $1.5 Bn annual payout). VAML (market cap ~ $18-20 Bn out of ~ $35 Bn total) likely to contribute roughly half of total dividends.
• CRISIL and ICRA upgraded Vedanta Limited to AA+ (stable); India Ratings maintains AA- with rating watch, management expects upgrade to AA+ within weeks (period unspecified).

Aluminium Hedges, Volumes, and Commodity Exposure

• 28% of volumes hedged for balance of FY 2026-2027 (Q2-Q4) at an average price of $3,062/tonne; Q2 FY 2026-2027 alone hedged 270 KT at a strike of $2,830/tonne.
• Q1 FY 2026-2027 hedging: 2,933 KT hedged at a strike price of $2,813/tonne, providing strong downside protection.
• Sales volume of 615 KT in Q1 FY 2026-2027 lagged record production by 7-8 KT due to inventory build-up from year-end stock-cleaning activities (normalised after Q4 FY 2025-2026).
• Global aluminium prices remain buoyant as of Q1 FY 2026-2027 due to supply-side constraints, supporting the favourable pricing environment.
• No inter-corporate loans or deposits will exist between any of the six listed entities in India or from Indian entities to Vedanta Resources, per management's stated policy.

FY 2026-2027 Guidance, Demerger Timeline, and Long-Term Targets

• Full-year FY 2026-2027 cost guidance reiterated at $1,650-$1,700/tonne (with an additional $50-100 for Middle East disruptions, implying $1,650-$1,800/tonne). Alumina production guidance for FY 2026-2027: 4.0-4.1 million tonnes from Lanjigarh (back-ended profile).
• Demerger timeline: NCLT process expected ~12 months, likely completed by FY 2027-2028. Real estate value unlock aspirational target of Rs.30,000 crore (~$3 Bn) via demerge of industrial lands into a pure play company.
• Management targets demerged Vedanta becoming a $5 Bn EBITDA enterprise by FY 2029-2030, underpinned by growth projects across aluminium, zinc, and iron & steel.
• VRL cash need for remaining 9 months of FY27: $400 million (interest + KCM), funded mainly by dividends. For FY28: ~ $1.0 Bn; for FY29: $730 million. Funding will come from brand fee ($400-450 million/year through FY29) and routine dividends ($550-600 million/year).
• International business volume target: near-term 300 KT, then 500 KT (phase 2), final 750 KT. Output should reach 450 KT within a year (~FY28) targeting cost of $1,200/tonne.
• Next earnings call for Q2 FY 2026-2027 scheduled at the end of October 2026.