Brokerages Up Targets For Hindalco Amid Rising Aluminium Prices

Analysts raised price targets for Hindalco Industries Ltd. as the prices of aluminium surged.

Aluminium prices reached $3,000 a tonne in London for the first time in 13 years on Sept. 13, according to Bloomberg data, on account of supply disruptions amid rising demand. The metal has surged about 14% over the past three weeks as supply risks increase throughout the industry, from bauxite mining in Guinea and alumina refining in Jamaica to aluminium smelting in China and beyond, a Bloomberg report said.

Shares of Hindalco gained as much as 0.62% as of 10:30 a.m. on Wednesday. The stock has doubled so far this year compared with a 24.58% rally in the benchmark Nifty 50 index during the period. Of the 28 analysts tracking the company, 27 have a ‘buy’ rating and one recommends a ‘sell’, according to Bloomberg data. The 12-month consensus price target implies an upside of 11.6%.

Here’s what brokerages have to say...

Jefferies on Hindalco

• Retains ‘buy’; raises price target to Rs 610 from Rs 560 apiece.

• The recent rally in aluminium prices has further lifted earnings outlook for Hindalco.

• Any supply disruptions in bauxite due to political issues in Guinea can drive cost push.

• Cost push should further benefit Hindalco as it is captive-bauxite.

• Step-down subsidiary Novelis to continue to benefit from structural shift towards aluminium in autos and packaging.

• Raises FY22-23E EPS estimates by 7-13% on higher aluminium prices.

CLSA On Hindalco

• Maintains ‘buy’, hikes price target to Rs 570 from Rs 555 apiece.

• Management indicates sustained strength In Novelis and aluminium prices.

• The company is working towards ensuring coal supplies for second half.

• Impact of semiconductor shortage is unlikely to worsen any further.