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On Monday, CLSA, a global brokerage and investment firm, increased its price target on Hindalco Industries (NSE:HALC) Limited (HNDL:IN) stock to INR815 from the previous INR800, while retaining its Outperform rating. The adjustment follows Hindalco's robust quarterly performance in India, attributed to elevated prices and steady costs.
Hindalco's recent financial results have been bolstered by favorable market conditions, including stable aluminium prices, which are projected to sustain the company's domestic aluminium profitability in the upcoming quarter. Additionally, a recovery in performance is expected at Novelis, the company's international subsidiary specializing in aluminum rolling and recycling.
The report by CLSA analysts also highlighted strategic advancements, such as the acquisition of secured coal blocks expected to yield benefits within two years, and the expansion of downstream operations. These initiatives are anticipated to further enhance Hindalco's profitability in India.
However, the firm noted that Hindalco's debt levels are likely to increase over the next three years due to ramped-up expansion projects. The financial impact of these projects is forecasted to become evident from the financial year 2027 onwards.
In his statement, CLSA analyst Indrajit Agarwal said, "Hindalco reported another strong quarter of performance in India helped by higher prices and flat costs. With stable aluminium prices, we believe 4Q domestic aluminium profitability is likely to remain strong, while Novelis was guided to bounce back. Secured coal blocks (benefit in two years) and downstream expansion should further support domestic profitability. Debt is likely to rise over the next three years as expansion projects pick-up steam, the benefits of which will become visible from FY27 onwards. We maintain our Outperform rating but lift our target price from Rs800 to Rs815 on a favourable valuation."
The revised price target reflects CLSA's confidence in Hindalco's growth trajectory and its ability to maintain a strong performance amidst ongoing expansion efforts.
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