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News Topical, Digital Desk : JPMorgan has adopted a bullish stance on Indian aluminum companies. Hindalco Industries and Vedanta are in focus on Tuesday, April 7th. The brokerage has upgraded both stocks from "neutral" to "overweight" and raised their target prices. This implies an upside potential of up to 22 percent for these stocks.
Aluminum prices
may remain elevated for a long time due to the West Asia conflict, according to the note. Higher prices on the London Metal Exchange and a weak rupee are expected to boost earnings. JPMorgan said that smelter outages due to the Iran war have led to a supply shortage. However, benefits from the commodity cycle may mitigate companies' recent debt concerns. Valuations of these stocks have also become attractive after the recent decline.
Hindalco Share Price Target The brokerage stated that current prices reflect the LME aluminum price of $2,900 per tonne, while the spot price is $3,500 per tonne. The target price for Hindalco has been raised from Rs 875 to Rs 1,125, implying a 20% upside. According to the brokerage, earnings at the Novelis unit have bottomed out, and the restart of the Oswego plant could improve profits. Scrap spreads are also expected to benefit. Earnings in the company's copper business are also expected to improve due to rising sulfuric acid prices.
Vedanta Share Price Target The target price for Vedanta has been raised from Rs 680 to Rs 850, implying a 22% upside. According to the brokerage, the risk-reward has become attractive at EV/EBITDA of 4x for FY27. Strengthening earnings in the aluminum and zinc businesses could offset the weakness in oil and gas volumes. Out of 31 analysts on Hindalco, 12 have given 'buy', 13 have given 'hold' and 6 have given 'sell' rating. Out of 14 analysts on Vedanta, 11 have given 'buy' and 3 have given 'hold' rating. In the last session, Hindalco shares rose by 1.15 percent to close at Rs 926.75 and Vedanta shares rose by 0.3 percent to close at Rs 689.5.
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