The share price of Hindalco Industries, which has been falling since Monday, fell more than 7% in early trade on the BSE on Thursday due to strong selling pressure. In contrast to its previous closing of ₹717.45, the Birla Group shares began at ₹716.95 and dropped as much as 7.1% to ₹666.80. On the other hand, the stock reduced losses. At approximately 01:05 pm, it was down 4.5% at ₹685.05. At 80,058 at the moment, the equity benchmark Sensex was down 0.03 per cent.
Experts blamed Constellium’s earnings report for the recent stock decline. Constellium is a prominent player in the production and recycling of aluminium goods worldwide. Constellium’s stock fell 28% in a single day on the release of the results.
According to media reports, the Paris-based company’s third-quarter profit and revenue were below expectations because of declining demand and the effects of flooding on its Swiss operations.
Constellium’s financial report serves as a standard for evaluating the health of the industry, according to experts. Investors are wary of Hindalco as a result of the company’s poor profits.
On November 11, Hindalco will release its profits for the September quarter.
Hindalco Q2 result expectations
Analysts anticipate that the company’s September quarter financial results will be a mixed bag.
Hindalco is expected to report a profit of ₹1,290 crore, according to Antique Stock Broking. This would be a significant increase of 59% year-over-year (YoY) but a decrease of 12% quarter-over-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.
Motilal Oswal Financial Services, a broking firm, anticipates a 45.4% YoY increase in adjusted PAT and a 5.1% YoY increase in net revenues. However, PAT may drop 7.6% and sales may drop 0.10 per cent on a QoQ basis.
The broking firm anticipates Hindalco’s EBITDA to record a 16.7% YoY gain but a 12.7% QoQ dip.
According to Sagar Shetty, a research analyst at StoxBox, Hindalco Industries has a bright future.
“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 shortly,” Shetty said.
However, technical analysts seem to be a little wary about the stock.
Choice Broking derivatives analyst Hardik Matalia said the stock is currently trading between ₹685 and ₹690, and the double-top pattern on the chart suggests short-term bearishness.
“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,” Natalia said.
