Sumangal Nevatia, Analyst, Kotak Institutional Equities maintains a constructive view on domestic steel, favouring non-integrated players like JSW Steel and JSPL due to supportive government policies and margin expansion potential.A structural global deficit in aluminium is driving the metals outlook and positioning Vedanta as the top investment idea, according to Sumangal Nevatia, Analyst at Kotak Institutional Equities.
Speaking at Kotak Institutional Equities’ Chasing Growth 2026 conference, Nevatia said aluminium has the strongest fundamentals among major commodities because supply growth is constrained while demand remains steady.
“Aluminium demand will structurally grow at a rate of anywhere between 2% and 3%.”
The constraint is on production. China has capped capacity at 45 million tonne, while smelters outside China face power shortages and lack long-term electricity contracts.
“Supply is not being able to keep pace… Outside of China… US, Europe, Africa… are struggling to feed these aluminium smelters with long-term stable power supply contracts.”
With limited new capacity coming onstream, he expects prices to remain supported at levels that incentivise fresh supply.
Demand is reinforced by energy transition spending and data centres, which require aluminium for electrical and structural efficiency. Substitution from copper adds another tailwind, with the copper-to-aluminium price ratio near 4x, well above historical triggers, prompting manufacturers to gradually redesign products using the cheaper metal.
Within this backdrop, Nevatia sees 25-30% upside in Vedanta.
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“This is one of the few companies which is seeing growth not just in the long term, but also in the medium term.”
Aluminium accounts for roughly half of its business, alongside zinc and silver, all of which are currently benefiting from supportive pricing. He also pointed to reduced promoter debt, improved balance-sheet comfort, strong cash flows, and valuations of about 4.5-5 times EV/EBITDA as key positives.
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Hindalco ranks lower in its pecking order due to back-ended domestic growth and supply outages at subsidiary Novelis.
Beyond non-ferrous metals, Nevatia is constructive on domestic steel, describing it as a consolidating, demand-led story supported by policy measures such as safeguard duties. As companies take price hikes, he expects profitability to expand, preferring non-integrated producers like JSW Steel and JSPL over integrated players such as Tata Steel and SAIL.
For the entire interview, watch the accompanying video
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