Hindustan Zinc, Vedanta, Hindalco: Aluminium, zinc, copper prices firm; stock targets

Antique Stock Broking in its latest note on metal sector said average LME aluminum, copper, and zinc spot prices have strengthened 7-41 per cent this quarter year-on-year (YoY) and 3-17 per cent against the December quarter's average, aided by lower LME inventory levels and weaker dollar index. The demand scenario for non-ferrous metals is expected to be aided by low LME warehouse stocks and increasing adoption by EV makers, renewable grids, and increasing demand for data centers, the brokerage said.

"Weaker caustic soda prices and YoY lower thermal coal costs should aid profitability of domestic non-ferrous companies," it added.

Antique Stock Broking has maintained 'Buy' on NALCO with a target price of Rs 420. It suggested 'Hold' rating on Hindalco Industries (target price: Rs 942), Vedanta (target price: Rs 729), and Hindustan Zinc (target price: Rs 621).

Antique said China’s 45 mtpa aluminum production cap, aluminum smelter disruptions in Iceland and Mozambique, and lower LME warehouse inventory could support global aluminum prices. New aluminum capacity expected to come online in Indonesia, however, may cap the price upside, it said.

"With GoI’s GST 2.0 reforms, aluminum and copper household items see a reduction in GST rates from 12 per cent to 5 per cent which should stimulate domestic demand," Antique said. 

The domestic brokerage said dollar index has weakened MoM and YoY and the ongoing rupee depreciation would aid in higher domestic and export realisation. 

On MoM basis, aluminum and zinc inventories at LME warehouses was down by 2.1 per cent and 4.2 per cent, respectively. Lead and copper inventories were up 39.1 per cent and 54.4 per cent, respectively. Antique said aluminum inventory at Shanghai Futures Exchange is 21.5 per cent higher than the 4QFY25 average and Chinese Lunar New Year holidays have slowed downstream production in China, which impacted LME aluminum prices that are down 5.5 per cent MoM.