Hindalco shares aim to arrest recent slide after these two important developments

Shares of Hindalco Industries Ltd. will be in focus on Thursday, June 11, on the back of two important developments that could help in arresting the recent fall in the stock price.

Why Is Hindalco In Focus Today?

The first important development surrounding Hindalco is the fact that the Oswego Hot Mill of its unit Novelis has resumed operations, in-line with the timeline guided by the management.

The Oswego plant was impacted by fire incidents last year between September and October.

Novelis' Oswego plant is an important for the company as it is a vital supplier to the North American automotive sector.

"Restarting the Oswego hot mill is an important step forward for our operations and most importantly, for our customers," Steve Fisher, President and CEO of Novelis said.

Hindalco's exchange filing also stated that with the hot mill now operational, Novelis is working closely to ramp up supply and is also enhancing operations with implementation of a standardized operating system.

Another Positive Development For Hindalco

Additionally, the government has also extended the existing anti-dumping duty on aluminium foil imports emanating from China, Malaysia, Thailand and Indonesia until December 15, 2026.

Although it is a small part of the overall business, the highest exposure though, is for Hindalco, compared to its peers.

Why Is HSBC Bullish On Hindalco?

In a note on Monday, brokerage firm HSBC said that it expects Hindalco's recent underperformance to reverse as Novelis normalizes operations post the Oswego fire and that LME prices continue to remain strong.

HSBC also wrote that at 4.6 times Enterprise value to EBITDA (EV/EBITDA) on spot LME prices, the risk-reward remains favourable for Hindalco.

The brokerage maintained its "buy" rating on Hindalco with a price target of ₹1,430, which implies an upside potential of 37% from current levels.

Why Are Hindalco Shares Declining?

Shares of Hindalco ended 3.5% lower on Wednesday at ₹1,039. The stock has now declined in five out of the last six trading sessions, in-line with the weakness seen in metal stocks, owing to a stronger US Dollar and fears of a rate hike by the US Federal Reserve by the end of the year.

Despite the recent fall, shares of Hindalco are still up 16% so far for the year.