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Hindalco Surges: Morgan Stanley Sees Big Upside
27 May
Summary
- Morgan Stanley initiates Hindalco coverage with 'Overweight' rating.
- Target price of Rs 1,325 suggests significant future gains.
- Company poised to benefit from tight aluminium supply and Indian demand.
Hindalco Industries' stock garnered significant attention on Tuesday, May 27, as global brokerage Morgan Stanley launched coverage with an "Overweight" rating and a target price of Rs 1,325. This suggests a projected increase from current trading levels.
The brokerage's positive stance is attributed to a tightening global aluminium demand-supply balance and robust structural demand within India. Elevated London Metal Exchange (LME) aluminium prices are also a key factor, alongside an anticipated recovery in Novelis operations starting from FY28.
Morgan Stanley highlighted that Hindalco's domestic business is expected to gain from improving aluminium prices and strong Indian market trends. The firm also forecasts a recovery for Novelis from FY28, bolstered by the ramp-up at Bay Minette and normalization at Oswego.
Further positive indicators include Hindalco's strong free cash flow generation and deleveraging plans, which are expected to facilitate value unlocking in the medium term. The brokerage anticipates Hindalco will outperform the broader industry in the next 60 days, driven by high LME aluminium prices and low global inventory levels.
