Citi has resumed its coverage on Hindalco Industries, rating it a ‘Buy’ and assigning a target price of ₹725, representing a potential upside of 17% from the current market price (CMP) of ₹618.20. Hindalco has been named Citi’s top pick in the metals sector, backed by positive industry tailwinds and promising diversification strategies.
Key Highlights:
- Pricing of Concerns:
- Citi believes most concerns, including Bay Minette capex, have been priced into the stock.
- Underperformance:
- Hindalco has underperformed compared to domestic non-ferrous peers, global aluminum producers, and LME (London Metal Exchange) prices over the last six months.
- Tailwinds for Growth:
- Expected LME upside in H2FY25 and Novelis’ diversification efforts could act as growth catalysts.
- India’s business costs are expected to decline due to alumina expansion and captive coal availability.
- Stable Financial Outlook:
- Novelis is projected to maintain its net debt/EBITDA below 3x despite aggressive capital expenditure plans.
CMP and Target:
- Current Market Price (CMP): ₹618.20
- Target Price (TP): ₹725.00
- Upside Potential: 17%
Conclusion:
Citi’s positive outlook on Hindalco is driven by its strong position in the metals space, favorable tailwinds, and the potential for operational improvements. Investors could find the stock attractive given its valuation and Citi’s optimistic forecast.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors are advised to conduct their own research or consult their financial advisors before making investment decisions.
