Hindalco Industries Ltd., a leading aluminum producer, saw its share price surge today following China’s announcement of economic stimulus measures. The stock rose by 3.95% to close at Rs 717.85, outperforming the broader market.
The rally in Hindalco’s share price was driven by China’s central bank governor, Pan Gongsheng, who announced plans to lower borrowing costs and inject more liquidity into the economy. The central bank also announced a 50 basis point (bps) cut in the reserve requirement ratio (RRR), the percentage of cash banks are required to hold as reserves.
The Chinese policy adjustments come in the wake of the US Federal Reserve’s substantial rate cut last week, a move that many analysts believe gives the People’s Bank of China (PBOC) greater flexibility to ease monetary conditions. This approach allows China to stimulate its economy while minimizing downward pressure on the yuan, as global monetary dynamics shift in response to the Fed’s actions.
Main Points
Hindalco’s share price has been on an upward trajectory, with the stock gaining 49.91% over the past year. The company’s market capitalization currently stands at Rs 1,58,406 crore, making it the second-largest player in the sector.
Key financial ratios for Hindalco include:
- PE Ratio: 14.97
- EPS (TTM): Rs 47.95
- Dividend Yield: 0.49%
- PB Ratio: 1.46
- Beta: 1.43
On the technical front, the Nifty Metal index has given an Ascending Triangle breakout on a daily scale. The index has also formed a sizable bullish candle on the breakout day, which adds strength to the breakout.
The daily RSI (Relative Strength Index) has surged above the 60 mark for the first time after 77 trading sessions, indicating that the index is likely to continue its upward journey and test the levels of 10,050 and 10,200 in the short term.
According to the latest analyst recommendations, 25 analysts have given an average EPS target of Rs 44.9 for Hindalco Industries Ltd. in FY24. The company reported a 3.12% decline in sales, witnessing revenue contraction for the first time in the last three years.
Analysts at Motilal Oswal Financial Services have a BUY rating on Hindalco with a target price of Rs 800. Prabhudas Lilladher also has a BUY rating with a target price of Rs 779.
Hindalco is planning to enter the solar module manufacturing sector with a new plant in Mundra, Gujarat. The company is evaluating a five-year plan for this venture, which will mark its first move into green energy components manufacturing.
The company’s entry into the solar module manufacturing sector is in line with the growing demand for renewable energy solutions. As the world transitions towards a more sustainable future, Hindalco’s foray into this space could potentially open up new avenues for growth and diversification.
