Most analysts tracking this Metal stock are bearish, but the one 'bull' sees 28% upside

13 analysts have coverage on National Aluminium Company Ltd. (NALCO), who's shares have declined in four out of the last five trading sessions. The stock has corrected nearly 15% during this period.

Out of those 13 analysts, six of them have a "sell" rating on the stock, while five have a "hold" recommendation. Only two analysts tracking the company have a "buy" rating on the stock.

One among the two bullish analysts tracking NALCO is HSBC, who has a "buy" rating on the stock along with a price target of ₹490. The price target implies an upside potential of 28% from current levels.

Why Is HSBC Bullish On NALCO?

HSBC's optimistic stance is primarily driven by recent geopolitical shifts impacting the global commodities market, specifically the supply dynamics of key raw materials.

A major catalyst for this positive assessment is the recent imposition of bauxite export curbs in Guinea. As a significant global producer, any disruption to Guinea's supply chain exerts immediate pressure on the international market.

These curbs have led to a noticeable increase in both bauxite and alumina prices globally. Because NALCO is a key player in the production of these materials, this price appreciation is viewed as a significant tailwind for the company’s revenue potential and profitability.

NALCO’s domestic aluminium prices have increased by approximately 17%, according to HSBC, largely attributed to the reset of domestic premiums at higher levels, reflecting robust demand and the company’s ability to leverage favorable market conditions to bolster its pricing power within the Indian market.

Beyond immediate market fluctuations, NALCO continues to be identified as a "clean" proxy to play the aluminium and alumina theme. The brokerage has valued the stock at 5.1 times Enterprise value to EBITDA, which, according to HSBC, is attractive.

Shares of NALCO are trading 1.6% lower on Wednesday, in-line with the fall seen in other metal stocks, at ₹377.6. The stock is still up 20% so far this year.