Emkay Research has initiated coverage on the non-ferrous metals space with a 'Buy' rating on National Aluminum and Vedanta, and a 'Sell' rating on Hindalco Industries.
The brokerage's investment case is based on favourable view on the supply and demand dynamics for aluminum. Emkay expects aluminum prices to average around $ 2,700 per tonne in FY26, higher than the $2,400 per tonne expected in FY24.
Emkay believes that growth drivers are currently in place for aluminum prices to surge higher. This is backed by a firmly balanced aluminum market, which is likely to see a deficit of 500 kilo tonnes in 2025.
View on Nalco
Emkay has initiated coverage on National Aluminium with a 'Buy' rating and a target price of Rs 275. This suggests a 26% potential upside.
Emkay notes on how 3 distinct aspects can help bolster the business' fundamentals, and translate into earnings momentum over the next 2-3 years. It expects the company's Ebitda to double to Rs 61,00 crore by FY27.
The brokerage believes the market is under-appreciating the earnings potential and project delivery of the company. Nalco is the brokerage's top pick in the Metals & Mining sector.
View on Vedanta
Emkay has initiated coverage on Vedanta with a 'Buy' rating, at a target price of Rs 600, which implies an upside of 21% from the stock's previous closing price.
The brokerage notes that Vedanta's demerger is in the final stages, which would split the group into 6 pure-play verticals. Vedanta is also moving towards project completions and bringing them onstream in the next 12-18 months, which poses well for the company.
Emkay also highlights how Vedanta's dividends have been a significant value creator for investors, delivering a total shareholder return of 18.5% per annum for the past decade. Furthermore, the company's deleveraging efforts will also help ease balance sheet concerns, as per the brokerage.
View on Hindalco Industries
With a neutral view on Hindalco Industries, Emkay has initiated coverage on the stock with a 'Reduce' rating. The target price of Rs 650 implies a 13% downside.
Emkay believes that the stock is pricing-in all the positives, including the optimism of the potential Novelis IPO, which was later called off.
The brokerage is not convinced playing the 'Bay Minette' capex cycle. It also highlights how the global copper market remains supply-constrained, which could likely translate into much lower treatment and refining charges in 2025, which is negative for the company
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