- Hindalco shares rose after Kotak Securities upgraded the stock to Buy with a higher target price
- Kotak views Hindalco's operational disruptions as resolved, enabling near-term growth prospects
- The brokerage expects Hindalco's Indian division to drive profitability from fiscal year 2028
Shares of Hindalco Industries are trading higher on Thursday, July 16, as the Aditya Birla Group metal major scored a significant upgrade from Kotak Securities. Recognizing an improving earnings trajectory and attractive risk-reward, the domestic brokerage firm upgraded the stock to a 'Buy' from a previous rating of 'Reduce', alongside hiking its target price to Rs 1,120 (up from Rs 1,100). On Thursday, shares of Hindalco opened at Rs 972.40 against a previous close of Rs 955.80 apiece on the NSE. This compares to a rise of 0.26% in the Nifty 50 benchmark. The stock is up 8% in one month.
Here is a breakdown of what the brokerage sees driving the stock's impending comeback:
Moving Past Disruptions
Kotak Securities notes that Hindalco is effectively poised for a structural comeback. The brokerage believes that the company's recent phase of operational disruptions is now firmly in the rearview mirror. Moving forward, the normalization of existing operations, combined with the successful rollout of key growth projects, is expected to act as the primary engine driving near-term and medium-term growth.
ALSO READ: Wipro, Tech Mahindra Trade Higher Ahead Of Q1 Earnings; Here's What Analysts Are Expecting
Hindalco Share Price Intraday
The Domestic Growth Engine Reving Up
A significant part of the optimism stems from Hindalco's Indian division, which the brokerage anticipates will formally join the broader growth track beginning in FY2028. The company has been steadily laying the groundwork with capacity additions across its metals portfolio, setting the stage for India-driven profitability over the next few years.
Favorable Yet Evolving Aluminum Dynamics
On the macro front, Kotak provided a nuanced view of global aluminum dynamics. While the absolute "peak deficit" in the aluminum market is receding, the overall supply-demand environment remains tight. This continued market tightness is likely to support steady pricing and stable realizations for primary producers like Hindalco, providing a solid floor for earnings.
ALSO READ: Wipro Q1 Results Today: Should You Buy, Sell Or Hold Shares Amid Weak-Quarter Preview?
Healthy Balance Sheet Intact
A key concern for investors with heavy-industry stocks is the impact of major spending cycles. However, Kotak Securities emphasized that despite Hindalco's ongoing and extensive capital expenditure (capex) projects-most notably Novelis's Bay Minette expansion-the company's balance sheet remains exceptionally healthy. The robust free cash flow generation capability ensures the company can fund its growth ambitions without overleveraging its financial position.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
