Hindalco can give over 80% return in one year despite metal being biggest loser on NSE, BSE in last one month—Here is why

Despite metal being the biggest laggard on the benchmarks (Nifty50 and BSE Sensex) in the past few months, global brokerages remain bullish on Hindalco Industries. As of June 17, Nifty Metal and BSE Metal have declined around 17-18% in the past one month. In comparison to benchmarks, the metal stock witnessed an even sharper cut of almost 23% during the same period as on Friday.  

Apprantely, metal stocks, including Hindalco, have been under tremendous pressure for the past three months. Shares of Hindalco corrected have corrected over 40% in the last three months and gave a negative return of 10% in the past one year as on June 17.  

Aluminium returning into surplus (from deficit) over FY23/24E is being seen as the major factor behind the fall in Hindalco share price. As per Zee Business TV report, aluminium prices are hovering near its 11-month low.  

Meanwhile, amid all the uncertainty, global brokerages Credit Suisse and CLSA are very optimistic as far as this metal stock is concerned. They see up to 82% upside in Hindalco in the next one year.  

CLSA | BUY| Target Price: Rs 580 

CLSA maintained a buy rating on Hindalco with a target price of Rs 580, which translates into an upside of 72.6% on Thursday's closing price of Rs 336 per share, in one year. As per CLSA, the stock is available at attractive valuation and going forward we may see a deficit in aluminum supply, ultimately helping the stock price.  

However, the brokerage highlighted a downside risk saying if China increases the supply of aluminium, it may adversely impact Hindalco.  

Credit Suisse | Outperform| Target Price: Rs 610 

Another global brokerage firm, Credit Suisse, which gave in line commentary with CLSA, sees Hindalco clocking a rather more aggressive return of above 80% from current levels. 

Maintaining an outperform rating, Credit Suisse gave a target price of Rs 610 per share for Hindalco. It translates into an upside of 81.5% on Thursday's closing price.  

ICICI Securities | Reuce 

On the other hand, domestic brokerage ICICI Securities remained unimpressed with the metal stock. It maintained a reduce rating on Hindalco, saying the aluminium players may have to face a demand-supply surplus over FY23/24.  

"Hindalco is feeling the possible pinch of aluminium returning into surplus, along with the traded instrument facing the headwinds of a rising interest rate environment and possible compression in Novelis margins," the brokerage added.