Kotak increases target prices of Hindalco, Vedanta & NACL

Hindalco (HNDL), Vedanta (VEDL) and NACL ratings were upgraded by Kotak Institutional Equities (KIE) while the targets were revised up to 44% in the metal sector after recovery apparently pushed the market into deficit.

Among the three companies, HNDL is the preferred pick for aluminum while NACL is KIE’s top ‘sell’.

Aluminum demand in 1QCY24 has exceeded expectations, mainly led by China, whereas ex-China demand is showing signs of bottoming out. A combination of better demand and rigid supply, due to power shortages in China, has pushed the market balance into a deficit in CY2024/25E from a surplus earlier.

“Metal prices further rallied in April 2024 on the news of sanctions on Russia by the US/UK. However, we do not see it as structurally impacting demand-supply as it should just realign trade flows,” says Sumangal Nevatia, analyst at KIE.

Here are the top picks of KIE:

Hindalco
Given reasonable valuations and the improvement in end-market demand outlook at Novelis, the new fair value for the stock has been determined at Rs 675, a 26.2% increase from earlier Rs 535.

Hindalco’s current market value stands at Rs 649.75.

NACL
On the back of expensive valuations, KIE recommends to sell the shares of NACL. From an earlier fair value of Rs 90, the current fair value has been assessed at Rs 130, a 44.5% change in the target.

The current market price stands at Rs 189.

Vedanta
KIE has priced-in a higher aluminum price forecast and significantly upgraded the earnings and fair value of Vedanta. The earlier target for VEDL was Rs 255, while the new target has been set at Rs 320 — 25.5% higher.

Currency the stock stands at Rs 396.65.

Also read: Bajaj Finserv Q4 Results: PAT jumps 20% YoY to Rs 2,119 crore

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)