Hindalco Stock Update:At its 52-week high today, is the metal stock a ‘buy’ at this moment?

Scheduled for commissioning by July 2025, the facility will initially manufacture 25,000 tonnes of aluminum foil, a crucial component in lithium-ion and sodium-ion cells, as stated in a press release by Hindalco Industries on December 12.

Stock Price Trend

In the current year, Hindalco’s stock has exhibited a robust performance, surpassing its benchmark index by a slight margin, with a gain of over 15 percent compared to a 13 percent rise in Nifty Metal. Positive returns were recorded in 7 out of the 12 months in 2023.

December has seen a 3 percent uptick in the stock following a remarkable 12 percent surge in November, the highest for the year. Notably, the stock experienced its most significant decline, nearly 15 percent, in February.

Over the past 12 months, the stock has shown an impressive 17 percent jump, outperforming the 11.5 percent rise in Nifty Metal. Achieving its 52-week high at ₹545.95 on December 14, 2023, the stock has surged by over 43 percent from its 52-week low of ₹381.00 recorded on March 20, 2023.

In the long term, specifically the last 3 years, the stock has proven to be a multibagger, doubling investor wealth with a soaring increase of 119 percent.

Looking at the financials for the quarter ending in September, Hindalco Industries reported consolidated profits of ₹2,196 crore, maintaining stability year-on-year. However, overall revenue from operations witnessed a 3.7 percent YoY drop to ₹54,169 crore, mainly attributed to the global decline in copper prices.

Despite the revenue dip, consolidated earnings before interest, tax, depreciation, and amortisation (EBITDA) showed a 6 percent YoY increase to ₹6,096 crore, with an EBITDA margin of 11.25 percent.

Hindalco Industries’ Managing Director, Satish Pai, attributed the solid performance to their focus on cost control and commendable results from all downstream segments. He highlighted the copper business achieving its best-ever quarterly results and positive growth in both upstream and downstream segments of Aluminium India.

As investors assess their options, several prominent brokerages provide insights into the current stance on Hindalco stock:

Prabhudas Lilladher: Positive Outlook

Prabhudas Lilladher expresses a positive view on Hindalco, raising its target price from ₹557 to ₹583, signaling a potential 10.5 percent upside. The brokerage emphasizes Hindalco’s advantageous position in the metals space, anticipating improvements in Novelis’ per ton EBITDA and the beneficial impact of opening captive coal mines post-FY26. Additionally, the focus on high-margin value-added products and Novelis’ robust performance contribute to the optimistic outlook.

Motilal Oswal: Bullish Perspective

Motilal Oswal maintains a bullish stance on Hindalco, setting a target price of ₹580, indicating a 10 percent upside. Despite global uncertainties, the brokerage anticipates a rebound in demand across various segments, driven by factors such as increased demand from EVs, consumer durables, and infrastructure. The brokerage highlights Hindalco’s potential to capitalize on growth opportunities and has adjusted its FY25E EBITDA/APAT upward based on an improved outlook.

JM Financial: ‘Buy’ Recommendation

JM Financial advocates a ‘buy’ for Hindalco, setting a target price of ₹600, implying an over 11 percent upside. The brokerage underscores the positive long-term outlook, citing confidence in Novelis achieving its medium-term EBITDA per tonne guidance and the secure coal supply post the acquisition of coal mines. With a substantial portion of EBITDA being non-LME linked, Hindalco remains JM Financial’s preferred play in the metal space.

Nuvama: ‘Hold’ Recommendation

Nuvama recommends a ‘hold’ for Hindalco, with a target price of ₹552. The brokerage acknowledges the profitability of India’s aluminium business being tied to range-bound aluminium prices. It foresees stable production costs and predicts Novelis earnings to remain firm at $525 per tonne from Q4FY24, following a seasonally weak Q3.

Technical Views

Om Mehra, Technical Analyst, SAMCO Securities:

HINDALCO demonstrates a robust bullish trend, marked by consistent higher highs and lower lows. The stock maintains its upward trajectory, firmly holding above key moving averages. The Relative Strength Index (RSI) at 72 levels indicates strong bullishness, complemented by the metal sector’s recent strength. The weekly chart reveals a breakout pattern, reinforcing the stock’s resilience in its primary trend. Indicators like MACD further validate the bullish momentum. A long position is suggested at the current market price (CMP) of Rs.532.8, with a target price of Rs.570 and a stop loss at Rs.507.

Gaurav Bissa, VP, InCred Equities:

Hindalco, having experienced a consolidation phase, recently witnessed an ascending triangle pattern breakout, holding above breakout levels. The RSI trading around 68-69 levels on daily charts suggests potential upward momentum. Bissa anticipates the stock testing 560 levels, with a possibility of reaching 600 levels upon sustained movement above 70 in RSI. Immediate supports are identified at 510 levels.

Sheersham Gupta, Director and Senior Technical Analyst at Rupeezy:

Breaking a significant resistance at ₹500, Hindalco formed a cup and handle pattern, maintaining levels above it. Gupta notes consistent higher highs and higher lows, with the daily RSI at 69.85 indicating bullish momentum. Analyzing open interest, the stock is expected to reach 565 in the short term. Long-term investors are advised to hold with a target of ₹600, placing a stop loss at 500 on a closing basis.

Rajesh Palviya, SVP – Technical and Derivatives Research, Axis Securities:

Palviya highlights the confirmation of a “cup & handle” breakout at 510 levels on a weekly basis, signaling bullish sentiments. The stock’s sustained uptrend is evident through higher tops and bottoms. Maintaining positions above key moving averages, it is poised for potential upward momentum towards 560-590 levels. Short-term support is identified around 515-505 levels, presenting buying opportunities for traders and investors. The RSI in bullish terrain across daily, weekly, and monthly time frames reinforces sustained strength.