Hindalco shares surge 172% in 1 year, global brokerages see 27% upside
Jefferies and CLSA have a ‘buy’ rating on the stock, with a rally in aluminium prices lifting the company’s earnings outlook
September 15, 2021 / 01:36 PM IST
Hindalco Industries’ shares continued to advance and touched a 52-week high of Rs 484.60 on September 15.
Shares of the Aditya Birla Group’s aluminium and copper manufacturing company have surged more than 170 percent in the past one year and global brokerages expect a further rise.
Jefferies has a “buy” call on the stock and raised its price target to Rs 610 from Rs 560, an upside of 27 percent from the current market price. It raised the FY22-23 EPS estimates by 7-13 percent on higher aluminium prices.
“The recent rally in aluminium prices has further lifted the earnings outlook. Any supply disruptions in Guinea can drive cost push, which should further benefit. Novelis should benefit from a structural shift towards aluminium in autos and packaging,” CNBC-TV18 reported the brokerage as saying.
Hindalco acquired Novelis, a producer of rolled aluminium and a major recycler of aluminium cans, in 2007.
CLSA maintained a “buy” rating on the stock and raised the target to Rs 570 from Rs 535, an upside of 19 percent. The management indicates sustained strength in Novelis and aluminium prices. The company expects aluminium prices to settle above past averages, it said.
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“The impact of the semiconductor shortage is unlikely to worsen any further. We raise estimates on higher LME. The company is well-placed with strong aluminium prices and robust scrap spreads,” it added.
The increase in aluminium prices has kept investors interested in Hindalco.
Aluminium prices touched a lifetime high on the Multi Commodity Exchange of India and the highest level since June 2008 on the London Metal Exchange at about $3,000 a tonne on strong fundamentals, supply concerns and the European Central Bank’s policy aimed at supporting economic recovery.
The metal witnessed a bullish trend all through August and so far in September due to demand recovery in China on higher industrial buying.Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol advises users to check with certified experts before taking any investment decisions.