Hindalco Industries, the flagship company of the Aditya Birla Group and one of the world’s largest aluminum rolling companies, has witnessed a remarkable surge in its stock price, nearing a one-year high. The stock has rallied 23% over the past eight weeks, outperforming the Nifty Metal index, which gained 8% during the same period.
Key Drivers Behind the Rally
The recent surge in Hindalco’s stock price can be attributed to several factors:
- China’s Stimulus Measures: The world’s largest producer and consumer of base metals announced fiscal stimulus measures, including a larger fiscal deficit and a 5% GDP growth target for FY25. This has fueled optimism about resilient metal prices and strong demand.
- Global Aluminum Deficit: Major players like Alcoa and Norsk Hydro have projected a global aluminum deficit of 550,000 tonnes in CY25, marking the first deficit in three years. This has further boosted investor confidence.
- Softening US Dollar Index: A weaker dollar has supported the rally in domestic metal stocks, with Hindalco emerging as one of the top gainers.
Performance and Outlook
Hindalco’s stock is now just 9.3% away from its all-time high of ₹772. Global brokerage firm Jefferies has maintained a ‘Buy’ rating on the stock, setting a target price of ₹800 per share, implying a 16% upside from its latest closing price of ₹691. Jefferies expects stable LME aluminum prices and strong demand for Novelis, particularly in the beverage can sector.
Similarly, JM Financial has reiterated its positive outlook on Hindalco, citing strong near-term earnings visibility and robust performance in India’s aluminum operations. The brokerage highlighted the company’s enhanced coal security and record-high run rates in the copper business as key growth drivers.
Market Dynamics
The cooling-off in global aluminum production growth, driven by China’s capacity cap and limited expansions outside China, has also contributed to the positive sentiment. Sustained demand in Europe and North America, particularly in the packaging and electrical sectors, is expected to further support Hindalco’s growth.
Conclusion
With a strong performance in recent weeks and a positive outlook from leading brokerages, Hindalco remains a solid investment option in the aluminum space. Investors are optimistic about the company’s ability to capitalize on favorable market dynamics and deliver robust earnings in the coming months.
