Stock Market update: Hindalco shares up by 2.60% as Jefferies retain ‘Buy’ rating

Jefferies also believes Hindalco’s 1.2 times one-year forward price-to-book value is attractive for a company pegged to give a 16 percent return on equity in 2022-23.

The share price of Hindalco Industries Limited grow by 2.60% in an early trade today. The share price hit a high of Rs. 499 per equity share on Wednesday, 09:42 AM IST. However, today’s trade opened at Rs. 494 per equity share. The aluminium and copper manufacturing industry Hindalco witness a surge in its share price as American Investment company, Jefferies Group retain the Buy rating.

The investment company Jefferies downgraded the stocks of steel industries like Tata Steel and Jindal Steel on the ground that the steel industry earnings are “inflecting down” due to poor demand and pricing environment. And, the major reason behind weak pricing is the shutdown in the Chinese economy as China is the biggest consumer of steel.

“We lower our optimism on India metals as we enter 2022. Weak macro and demand concerns in China are weighing on metal prices,” Jefferies India said in a note.

Therefore, downgrading of the steel industry has proved to be beneficial for the aluminium industry. According to Jefferies, shifting the focus on transitional metals such as Aluminum and copper as new capital expenditure in China will prove to be beneficial for companies like Hindalco Industries.

“We find Novelis also well-placed for the global shift to aluminium from steel in autos, and from plastics & glass in beverage cans,” Jefferies India said. In addition to the bright fundamental outlook, Jefferies also believes Hindalco’s 1.2 times one-year forward price-to-book value is attractive for a company pegged to give a 16 percent return on equity in 2022-23.

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