Why ICICI Securities is bullish on these 2 metal stocks
Premium- ICICI Securities has maintained its Buy rating on Hindalco shares with a 12-month target price of ₹500
During Q1FY23, coal sourcing for Hindalco’s India aluminium business was about 50% of the requirement was met through linkage coal, 31% was met through e-auction coal and balance was met through imports and captive mines.
For Q2FY23 also, the coal sourcing mix is likely to be similar to Q1FY23. However, from Q3FY23 linkage coal sourcing is likely to increase to ~60-65%. “With higher proportion of linkage coal in overall coal sourcing mix, Hindalco’s India aluminium business cost of production (CoP) is likely to decline in Q3FY23, thereby auguring well for the company," said domestic brokerage and research firm ICICI Securities.
Hindalco’s share price has given a multibagger return of about 120% in the last two years, from around ₹192 in September 2020 to ₹420 in September 2022. The brokerage has maintained its Buy rating on the metal stock with a 12-month target price of ₹500 per share.
On the back of a healthy operational performance during Q1FY23, Novelis has upward revised its full year EBITDA/tonne guidance to $525/tonne from $500/tonne earlier. For Novelis, we model EBITDA of US$525/tonne each for both FY23E, FY24E and we model consolidated EBITDA margin of 12.9% for FY23E and 13.4% for FY24E," as per ICICI Securities which could act as key triggers for future price performance for Hindalco shares.
Hindalco is the world’s largest aluminium company by revenues and a major player in copper. Over the years, Hindalco has transformed its business model to reduce dependence on volatile LME price movement and is focusing on a stable portfolio of value added produces. Novelis has leveraged its extensive recycling footprint and favourable market conditions to increase its recycled content to 61% in FY21, it highlighted.
In its metal sector coverage, ICICI Securities said it also likes Ratnamani Metals and Tubes (RMTL). Ratnamani Metals is a niche player with superior capabilities in the industrial pipes and tubes segment. It has maintained its Buy rating on the multibagger metal stock, that is up about 130% in two years, with a target price of ₹2,000.
MINT PREMIUM See All
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less