VAML Q2 FY27 Earnings Call: Guides 3-5% Quarterly Volume Growth, Targets $5 Billion EBITDA Run Rate

VAML held its Q2 FY27 earnings call on October 28, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Record Production Drives a Standout Quarter

• Revenue of Rs.22,066 crore (+41% YoY, +5% QoQ) — driven by record production, improved marketing mix and cost discipline, despite sequential metal price moderation; EBITDA at Rs.10,192 crore (+83% YoY, -3% QoQ).
• PAT of Rs.6,187 crore — more than doubled YoY and near-flat QoQ excluding ~Rs.400 crore of exceptional charges recognized in Q2 FY 2026-2027.
• Aluminum production at an all-time high of 649,000 tons (+5% YoY, +3% QoQ) — alumina production hit a record 895,000 tons (+37% YoY, +8% QoQ); value-added production at a record 432,000 tons (+31% YoY, +11% QoQ).
• NEP of $453/tonne in Q2 FY 2026-2027 vs $205/tonne in Q2 FY 2025-2026 — lifted by stronger VAP production and domestic mix (record domestic sales of 338,000 tons); PFA production up 46% and billet up 9% YoY.
• Hot metal cost at $1,722 (+1% QoQ) — structural alumina cost benefits were offset by inflationary pressures on carbon and fuel oil.
• Only 26% of the 83% YoY EBITDA growth came from operational factors — the balance came from market and one-offs; sequentially, the 10% LME decline was majorly offset by higher volumes and operational factors.

Deleveraging, Refinancing and Dividend Discipline

• Net debt reduced by Rs.3,090 crore in Q2 FY 2026-2027 to Rs.26,442 crore — from Rs.29,532 crore at end-Q1, after accounting for a Rs.3,190 crore dividend payment; underpinned by Rs.6,043 crore of quarterly cash flow; net debt/EBITDA improved to 0.7x from 0.9x; ROCE at 60%.
• Refinanced more than Rs.7,000 crore of debt during Q2 FY 2026-2027 — average term debt maturity now 4.1 years with bulk of maturities pushed to FY31 and beyond; average interest cost ~8.5%.
• Ratings upgraded/reaffirmed — ICRA and CRISIL reaffirmed AA+ (stable), while India Ratings upgraded Vedanta Aluminium to AA+ (stable).
• ~50% surplus cash expected after FY 2026-2027 exit EBITDA run rate of $5 billion (~Rs.45,000-50,000 crore) — CFO Anup Agarwal sees ~Rs.25,000 crore (consolidated) and Rs.17,000-18,000 crore (standalone) deployable across deleveraging, the new expansion project, and dividends.
• Dividend of Rs.8/share (~2% yield) paid during the quarter — management guided to a dividend of broadly 3-5% of market cap every year (period unspecified); buyback, per the CEO, is a board matter that "will be considered as and when by the board."

~$200/Tonne Drawing-Board Cost Reduction

• CFO guided hot metal cost ~$150-175/tonne lower vs H1 FY 2026-2027 levels — $100-125/tonne from alumina/bauxite even at partial ramp-up, $30-35/tonne from ramping up Gogarpalli (called the cheapest mine), and a further ~$50/tonne if the Middle East disruption eases (period unspecified).
• $100-125/tonne of the ~$200/tonne drawing-board initiatives expected by exit of FY 2026-2027 — balance within one or two quarters thereafter (FY 2027-2028).
• Sijimali bauxite cost guided at ~$60/tonne in FY 2026-2027 — aided by a 50% early-commencement rebate running for the next 1.5 years, implying ~$25/tonne savings vs imported bauxite during the rebate window; ramp path of 1 MT in FY 2026-2027, 5-6 MT in FY 2027-2028, then the 9 MT EC capacity, with potential to go ~40% beyond the EC cap (period unspecified).
• OMC bauxite provisioning at Rs.3,000 vs latest OMC price of Rs.1,000 — implying a hit of only $8-10/ton on an ongoing basis; 2.4 million tons of OMC bauxite (expandable to 4.8 million tons or higher) carries savings of ~$15/ton; CFO stated the math favors costs coming down rather than going up (period unspecified).
• Coal positioning is a structural advantage — Jharsuguda and the BALCO plant at Korba sit at the pit head with mines only ~20-25 km away (Jharsuguda adjacent to MCL), insulating VAMAL from country-wide coal shortages and price turbulence; Jamkhani operational at ~2.5 million tons in FY 2026-2027, Kudloi has the shovel on the ground, Gogarpalli planned to start in Q4 FY 2026-2027.
• Renewables contracted at 500 MW with Serentica — once fully commissioned this meets ~10-12% of the power requirement (period unspecified); management wants to lift the RE share to ~25% going into FY29-FY30; current RE mix rose from 321 MW in Q1 to 367 MW in Q2 FY 2026-2027, targeting more than 400 MW for FY 2026-2027.
• Digital and AI projects identified across operations and enabling functions — carrying an annualized benefit potential of $87 million (period unspecified).

3-5% Quarterly Volume Growth; Lanjigarh and BALCO Ramp

• Management plans ~3-5% volume increase each and every quarter going forward — expected in Q3 FY 2026-2027, Q4 FY 2026-2027, and through FY 2027-2028, in both aluminum and alumina; management clarified it had NOT guided for lower Q2 FY 2026-2027 volumes.
• Alumina targeted at more than 1 million tons in Q3 FY 2026-2027 — with 10% incremental refinery output targeted in each of Q3 and Q4 FY 2026-2027 to end FY 2026-2027 at designed capacity; captive alumina mix to reach 85% exiting FY 2026-2027.
• Captive bauxite expected to rise from 40% currently to ~75% exiting FY 2026-2027 — via OMC expansion and Sijimali startup; consent to operate for Sijjimali obtained in September 2026, and BALCO declared preferred bidder for the Kallapat bauxite block.
• BALCO pot line 3 at 50% of pots in full production — full capacity run rate targeted by end of FY 2026-2027; with the second zone commissioned, the third and final zone is poised to operationalize in Q3-Q4 FY 2026-2027 to reach the target run rate of 435 KTPA by March exit (end-FY 2026-2027).
• Gogarpalli mine approvals targeted by end of Q4 FY27 — production likely to start at end of FY 2026-2027 or early FY 2027-2028, with a target of 5 million tons from Gogarpalli in FY 2027-2028.
• Planned power plant shutdowns in Q3 FY 2026-2027 — power cost expected to return to Q1 FY 2026-2027 levels thereafter; coal mine operationalization targeted in H2 FY 2026-2027.

3 MT Greenfield in the Wings; Tight CY2026, H2 FY27 Supply Risk

• Greenfield expansion planned at 3 million tons of aluminum plus a 6 million ton refinery — land applied for at Kamakhya Nagar (~1,450 acres at Kamakhya Nagar and Dhinkanal for the smelter, 400 acres at Kalyan Singpur for the refinery) at a "very advanced stage of allotment"; public hearings completed for the refinery and smelter application; no firm capex or timeline provided.
• New smelter to replicate BALCO's 525 kA potline — configured for 8, 7, 7, 7 lines; capex targeted at similar or better than the BALCO benchmark of ~$2,100/ton of aluminum capacity (smelter only), with power and refinery capex to be structured separately and various options being explored (timing unspecified).
• Execution readiness in place — a dedicated team of 10-15 engineers is already working on project packages, with orders to be placed once there is clarity on land; CEO cited the BALCO project as evidence of rapid execution at the least capex.
• Global aluminum market expected to remain tight in 2026 with a deficit of 0.7 million tonnes — but CFO Anup Agarwal cautioned that new facilities in the Middle East and Indonesia toward the later part of FY27 would add supply, creating price pressure in the second part of FY27; if Gulf production normalizes (full output expected from Q1-end/Q2-beginning of CY2027) and ~1 million tonnes of additional capacity comes up in Indonesia and the Middle East, it could add ~1-1.4 million tonnes of extra supply in the later half of FY27.
• Domestic demand remains very robust — CEO Rajesh Kumar cited "very big upside" from growth in power, transportation, lightweighting and other sectors in India; management also cited an estimated 40% demand growth in the Indian market between CY2025 and CY2030.
• Scaling towards 3 million tonnes aluminium and 5 million tonnes alumina capacity — via ramp-up at BALCO and Gandhigadi, targeting hot metal cost of ~$15.50/tonne and >90% value-added product mix post project completion and debottlenecking (period unspecified).

OMC Litigation, Q3 Cost Inflation and NEP Headwinds

• OMC debit note includes an interest component of ~Rs.1,100-1,200 crore as per OMC's own calculation — CFO Anup Agarwal said the demand is contingent on the case the company has filed in the Supreme Court; the matter (High Court order appealed to the Supreme Court) has been partially heard, with further hearing expected after the Diwali vacation, and remains sub judice.
• Vedanta continues to lift OMC bauxite at the price determined by OMC, under protest — OMC is expanding its mine from 3.6 million tons to 6 million tons (period unspecified), 80% of which is reserved for refineries in Odisha as per OMC's LTL policy; the CFO said Vedanta will definitely target higher upliftment from OMC going forward.
• Hot metal cost guided up ~4% in Q3 FY 2026-2027 vs Q2 — driven by shutdowns and carbon factors; H1 FY 2026-2027 hot metal cost was ~$1,710-1,720/ton, with H2 expected broadly at similar or slightly lower levels; FY 2026-2027 full-year cost guidance unchanged, with some escalation expected in Q3 on input inflation and planned power plant shutdowns.
• H2 FY 2026-2027 NEP expected ~$50/ton lower — Q2 NEP was ~$425/ton; driven by the lower QNJP seen in Q2 (referenced at ~$410), with QMGP accounting for ~$70 of the decline, partly offset through increased VAP and domestic sales.
• Community engagement is the current gating step at Sijimali (CG Mali) — government approvals are in place; the CEO flagged opposition "forces" visible in the media as a risk and said the company is treading the path very carefully toward the 1 million ton target in FY 2026-2027.
• BALCO structuring remains open — on BALCO (51% stake), the CFO said all options are on the table and structuring will be looked at as and when the project is finalized, with some capex possibly coming into BALCO; no specific configuration confirmed.
• Management expects to exit FY 2026-2027 at an EBITDA run rate of $5 billion at current LME — with planned value-added products and expected cost levels; ~22% of volumes for the balance of FY 2026-2027 hedged at an average LME of $3,274/tonne.