Hindalco Industries share price, which has been declining since Monday, faced heavy selling pressure on Thursday, plunging over 7 per cent in early trading on the BSE. The Birla Group stock opened at ₹716.95 against its previous close of ₹717.45 and fell as much as 7.1 per cent to the level of ₹666.80. The stock, however, pared losses. Around 01:05 pm, it traded 4.5 per cent down at ₹685.05. Equity benchmark Sensex was down 0.03 per cent at 80,058 at that time.
Experts attributed the fresh fall in the stock to Constellium's earnings report. Constellium is a global major in the manufacturing and recycling of aluminium products. Shares of Constellium crashed 28 per cent overnight after it reported the results.
Media reports suggested that the Paris-based company reported below-expected third-quarter profit and revenue due to weakening demand and the impact of flooding on its Swiss facilities.
Experts pointed out that Constellium’s earnings report acts as a benchmark for assessing industry health. The company's weak earnings have led to investors' cautious approach toward Hindalco.
Hindalco will report its September quarter earnings on November 11.
Experts expect the company to report a mixed set of numbers for the September quarter.
Antique Stock Broking expects Hindalco to report a profit of ₹1,290 crore, sharply higher by 59 per cent year-on-year (YoY) but lower by 12 per cent quarter-on-quarter (QoQ).
"Standalone revenue is forecasted to remain largely flat YoY but decline 8.1 per cent QoQ impacted by sequentially lower aluminium and copper prices. EBITDA would improve 39.1 per cent YoY to ₹2,450 crore aided by lower input commodity costs and improved operations," Antique said.
Brokerage firm Motilal Oswal Financial Services expects a 5.1 per cent YoY rise in net sales and a 45.4 per cent YoY jump in adjusted PAT. On a QoQ basis, however, PAT may decline 7.6 per cent, and sales may slip 0.10 per cent.
The brokerage firm expects Hindalco to report a 16.7 per cent YoY growth but a 12.7 per cent QoQ decline in EBITDA.
Sagar Shetty, a research analyst at StoxBox, is positive about Hindalco Industries for the long term.
"We expect that the rising aluminium prices due to strong demand in Asia will positively affect the company’s profitability, given its position as the world’s largest aluminium rolling and recycling company and Asia’s largest producer of primary aluminium, and it is further expanding," said Shetty.
"Novelis, a subsidiary of Hindalco that produces automotive and beverage can sheets, is accelerating its efforts to increase the recycled content in its products. It has entered into a three-year strategic partnership with TSR Recycling GmbH & Co. KG to source 75,000 tonnes of raw materials from presorted and processed end-of-life aluminium products. This will produce low-carbon aluminium sheets for the automotive industry, supporting the growing demand for aluminium with recycled content. We believe these factors would benefit Hindalco in the near future," Shetty said.
On the other hand, technical experts appear slightly cautious on the stock.
According to Hardik Matalia, a derivatives analyst at Choice Broking, the stock currently trades between ₹685 and ₹690, and the chart has formed a double-top pattern, indicating potential bearishness in the short term.
"The stock has broken below a key support level near ₹715, which is now expected to act as resistance. This breakdown also confirms a loss in the pattern of higher highs and lower lows, signalling a short-term trend reversal. The next support is around ₹640, aligning with the 200-day exponential moving average (EMA)," said Matalia.
"The Relative Strength Index (RSI) stands at 39.43, suggesting that the stock is nearing oversold territory, though it hasn't entered deeply oversold levels yet. Additionally, the stock has breached its 20-day and 50-day EMA levels, reinforcing the bearish momentum. It may now attempt to move closer to the 200-day EMA, which could offer strong support if the decline continues.
In conclusion, based on technical analysis and current market conditions, Hindalco presents a bearish outlook. The current setup suggests caution for long positions, with a focus on selling or shorting opportunities," Matalia said.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
