HSBC Upgrades Hindustan Zinc to 'Buy', Raises Price Targets on Hindalco and NALCO
HSBC upgraded Hindustan Zinc to 'Buy' from 'Hold' and raised its price target to ₹750.00 from ₹520.00, while also increasing targets for Hindalco Industries to ₹1,240.00 and NALCO to ₹420.00. The brokerage expects a metals super cycle driven by EV demand, energy storage growth, and supply constraints, favoring copper, aluminium, and battery materials. Despite broader Nifty Metal index weakness, Hindustan Zinc and Hindalco gained up to 2.00% following the upgrades.
*this image is generated using AI for illustrative purposes only.
HSBC has issued bullish recommendations on three major Indian metal companies, upgrading Hindustan Zinc Limited and raising price targets across the sector. The brokerage's optimistic outlook is based on expectations of a potential metals super cycle driven by structural demand changes and supply constraints.
HSBC's Rating Actions and Price Target Revisions
The brokerage made significant changes to its coverage of Indian metal stocks on Monday, January 19:
| Company | Previous Rating | New Rating | Previous Target | New Target | Change (%) |
|---|---|---|---|---|---|
| Hindustan Zinc | Hold | Buy | ₹520.00 | ₹750.00 | +44.23% |
| Hindalco Industries | Buy | Buy | ₹1,060.00 | ₹1,240.00 | +16.98% |
| NALCO | Buy | Buy | ₹373.00 | ₹420.00 | +12.60% |
The most notable change was Hindustan Zinc's upgrade from 'Hold' to 'Buy', accompanied by a substantial 44.23% increase in the price target. HSBC maintained its positive stance on Hindalco Industries and NALCO while raising their respective price targets.
Super Cycle Expectations Drive Optimism
HSBC's Global Metals team outlined the rationale behind their bullish outlook, citing multiple factors that could trigger a super cycle in select metals. The brokerage identified strong demand from emerging sectors such as electric vehicles and energy storage systems as key growth drivers. Additionally, a prolonged lack of investment has led to slower supply growth, creating potential supply-demand imbalances.
Ongoing supply constraints and disruptions further support the case for higher metal prices. HSBC expects specific metals to benefit more than others from these trends:
- Key beneficiaries: Copper, aluminium, battery raw materials, and platinum group metals
- Underperformers: Bulk commodities expected to continue lagging
Market Performance and Trading Activity
Despite the positive analyst recommendations, the broader metal sector faced headwinds on Monday. As many as 10 stocks on the Nifty Metal index were trading with losses during the session. However, Hindustan Zinc and Hindalco Industries emerged as notable exceptions, ranking among the biggest gainers on the Nifty Metal index with gains of up to 2.00% each.
The contrasting performance between these upgraded stocks and the broader metal index highlights the market's selective approach to the sector, with investors potentially responding positively to HSBC's specific recommendations while remaining cautious about the overall metal space.
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