Indian aluminium stocks saw a strong rally on Monday following China’s announcement to withdraw export tax rebates for aluminium and copper products starting December 1, 2024. The policy is expected to curb Chinese exports, which represent a significant portion of the global aluminium supply, thus boosting the competitive position of Indian producers.

Key players like National Aluminium Company Ltd (Nalco), Hindalco Industries Ltd, and Vedanta Ltd were among the biggest gainers, with stock prices soaring up to 10% during the trading session. Aluminium prices also witnessed a sharp uptick of around 9% globally, reflecting optimism in the market.

Performance of Major Stocks

1. Nalco (National Aluminium Company Ltd)

   • Nalco hit the 10% upper circuit, closing at ₹241.75, up from ₹219.80 in the previous session.

   • Nalco’s market capitalization crossed ₹44,400 crore.

   • Analysts cited cost-saving factors like lower coal prices and declining CP coke prices as drivers of improved EBITDA CAGR at 16% for FY24-27.

   • Brokerage Views:

     • InCred Equities: Downgraded to "Hold," with a target price of ₹176 due to alumina pricing anomalies.
     • Axis Securities: Upgraded to "Buy," with a target price of ₹250, highlighting alumina refinery expansion and lower coal costs.

2. Hindalco Industries Ltd

   • The stock gained 4.86% to close at ₹657.60.

   • Hindalco remains a preferred investment in the sector due to its resilient domestic aluminium operations, strong copper business performance, and expansion in downstream capacities.

   • Brokerage Views:

     • JM Financial Services: Rated "Buy" with a target price of ₹760, citing steady EBITDA contributions from non-LME operations.
     • Antique Stock Broking: Maintained a "Buy" rating, with a higher target price of ₹794.

3. Vedanta Ltd

   • Vedanta’s shares rose by 4.52%, closing at ₹453.10.

   • Aluminium is a key contributor to Vedanta’s business, followed by Hindustan Zinc Ltd.

   • Brokerage Views:

     • Emkay Global: Emphasized the potential of Vedanta’s ongoing demerger to unlock value, estimating a 57% upside with a target price of ₹600.
     • Nuvama Institutional Equities: Positive on aluminium profitability due to increased use of captive alumina and higher aluminium prices, setting a target price of ₹663.

Market Drivers

1. China’s Policy Shift:

   • China’s aluminium exports, which stood at 5.7 million tonnes (MT) in 2023, are expected to rise to 6.6 MT in 2024.
   • The withdrawal of export tax rebates is anticipated to limit export flows, creating opportunities for Indian aluminium producers.

2. Aluminium Prices and Demand:

   • Rising aluminium prices globally are boosting profitability for Indian producers.
   • Strong domestic demand and growing downstream capacity add to the sector's bullish outlook.

3. Cost Advantages:

   • Indian companies like Nalco benefit from lower coal prices and increased captive alumina usage.

Conclusion

Indian aluminium companies are set to gain from China’s export tax changes, which are likely to tighten global supply. With strong fundamentals, cost efficiencies, and robust demand, stocks like Nalco, Hindalco, and Vedanta present attractive investment opportunities. Analysts maintain a positive outlook on the sector, with several brokerage firms recommending a "Buy" for these stocks.

Stay updated on stock market trends and the latest news on the aluminium industry for more informed investment decisions.