Vedanta To Nalco: Indian Aluminium Players Stand To Gain From These Two Global Factors
If aluminium prices hold steady for the rest of 2025, Nalco's near-term earnings could see an upgrade, according to Emkay Research.
Indian aluminium players like Vedanta Ltd., National Aluminium Co., and Hindalco Industries Ltd. gained between 2-3% intraday on Thursday.
The stocks have also seen steady gains in the past week due to increasing aluminium prices. Aluminium players also stand to gain from two global tailwinds.
Aluminium Prices Gain
Spot aluminium prices rose as much as 1.83% intraday on Jan. 16 to $2,606 per million tonne. This comes after prices gained 3.3% in the past week. Over a longer time period of one year, global aluminium prices have remained healthy and on a bullish trend, rising over 19%.
Emkay Research expects global aluminium prices to remain steady as well. The brokerage expects prices to average $2,500.6 and $2,600 per million tonne in fiscal 2025 and fiscal 2026, respectively.
These expected higher prices are a positive sign for sales realisations of Indian players.
Indian Aluminium Players Buoyed By Global Tailwinds
Indian aluminium players also stand to benefit from two main global factors:
The world's largest aluminium producer—China—is all set to face significant changes in its aluminium production capacity. The country's production is expected to reach a record high this year, which will be close to the 45-million tonne cap the government has set. This would lower China's export opportunity. This is not only positive for Indian manufacturers, but could also help shore up global prices.
Media reports also state that the European Union is considering more import restrictions on Russian aluminium, as part of a new package of sanctions targeting Moscow for its invasion of Ukraine. While the impact on Russia would be limited due to other sanction-neutral aluminium buyers, India could benefit with increase in in EU demand.
Indian Players: Exposure To Aluminium
National Aluminium Co.'s primary focus is aluminium, among other metals. The company derives 73% of its FY24 sales volumes from aluminium-based products.
If aluminium prices hold steady for the rest of 2025, Nalco's near-term earnings could see an upgrade, according to Emkay Research. The company has the potential for a 23.5% upgrade to its FY26 Ebitda estimates, it said.
Hindalco Industries is engaged in the production of aluminium and copper. The company's India-based aluminium upstream segment accounted for 33% of its FY24 Ebitda, while the downstream segment accounted for 2%. Further, the company's international subsidiary, Novelis Inc, which aims to be the leading provider of aluminium solutions, accounted for 54% of the company's consolidated Ebitda.
While Vedanta is one of the largest primary aluminium producers in India, 26% of its FY24 Ebitda came from the aluminium segment.
What's Priced In?
As per Emkay Research, the market is currently pricing in 17.9% and 9.2% lower commodity prices for National Aluminium and Vedanta, respectively. While, for Hindalco Industries, the market is factoring in 16.2% higher commodity prices.
