- Tata Steel and Hindalco benefit from improving global and domestic metal prices
- Macquarie rates Tata Steel outperform with Rs 240 price target, 14% upside
- Hindalco gets neutral rating with Rs 1,080 target, implying 5% upside
Tata Steel Ltd. and Hindalco Industries Ltd. are benefiting from improving global and domestic metal price trends, though analysts at Macquarie highlight differing risk-reward dynamics for the two stocks.
The brokerage has placed a 12-month price target of Rs 240 on Tata Steel, indicating a potential upside of 14% over the previous close, and an 'outperform' rating on the stock.
On the other hand, the firm has a 'neutral' rating on Hindalco with a price target of Rs 1,080 that implies an upside of 5%.
While both metal producers stand to gain from improving market conditions, Tata Steel appears better positioned for earnings recovery, whereas Hindalco's near-term upside may be restrained by valuation and hedging-related factors.
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Tata Steel
The constructive outlook on Tata Steel is driven by stabilising domestic steel prices and improving sentiment in Europe. Since December 2025 lows, domestic steel realisations have risen by around 15%, creating potential upside risk to earnings, Macquarie analyst Ashish Jain said in a note.
Additionally, European policy initiatives such as the Carbon Border Adjustment Mechanism (CBAM) and a proposed reduction in steel import quotas are expected to support cash-flow recovery in Tata Steel's EU operations over the coming months. On the volume front, production is likely to pick up as the company ramps up its Kalinganagar plant and commissions 0.75 million tonnes per annum of electric arc furnace capacity, although volumes still trail domestic peers.
Tata Steel vs Hindalco stock year-to-date
Hindalco
Meanwhile, Hindalco Industries is positioned favourably amid a strong aluminium price environment, with prices up approximately 25% year to date, according to Macquarie analyst Jay Narayanan.
However, upside may be capped. The Aditya Birla Group company's hedging policy limits the full benefit of rising prices, while the stock's 16% year-to-date rally already reflects much of the optimism.
At its US subsidiary Novelis, operating income (Ebitda) and cash flows are expected to improve from December 2025 lows as operations stabilise, though meaningful volume growth is likely to be back-loaded into FY27. Valuation also acts as a constraint.
The board will meet on May 22 to consider and approve the financial results for the period ended March 31, 2026 and recommend dividend, if any.
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