NALCO, Hindalco, Vedanta surge up to 9% as China cancels export tax rebates

The development is likely to curtail China's aluminium exports, thereby tightening global supply and driving up prices, ICICI Securities said

Shares of National Aluminium Company (NALCO), Hindalco Industries and Vedanta have surged by up to 9 per cent on the BSE in Monday’s intra-day trade in an otherwise weak market after China said it would cancel export tax rebates.

 

As per media sources, China will be cancelling export tax rebates for aluminium and copper products, which will be effective from December 1, 2024. This has led to a surge in LME aluminium prices by 8 per cent, reaching $2,730 per tonne.

 

Among the individual stocks, NALCO has rallied 9 per cent to Rs 240.20 on the back of nearly two-fold jump in average trading volumes. The stock is trading close to its 52-week high level of Rs 248 that it hit on November 8. Since April, thus far in the financial year 2024-25, the stock has zoomed 58 per cent.

 

The company posted a robust performance in the first half of the current financial year with a 199 percent rise in net profit that soared to Rs 1,663 crore, compared to Rs 556 crore for the corresponding period of the previous year. It has achieved its best-ever performance in domestic metal sales for H1FY25, recording the highest cumulative domestic metal sales of 221,966 MT during the period.

 

Shares of Hindalco Industries have gained 5 per cent to Rs 656.05, while Vedanta climbed 4 per cent to Rs 452.45 on the BSE on Monday's intra-day trade.

 

According to ICICI Securities, this development is likely to curtail China’s aluminium exports, thereby tightening global supply and driving up prices. Consequently, this is a favourable development for Indian aluminium companies such as Hindalco, Vedanta, and NALCO, it added. 

 

Among these, we prefer Hindalco given its strategic capacity expansion at Indian and Novelis operation amid healthy demand for aluminium and copper metal due to its incremental application in automobile and renewable spaces, higher focus on value added products, improving operating efficiencies, and controlling balance sheet leverage with debt to equity at approximately 0.5x, the brokerage firm said in a note.

 

Meanwhile, aluminium and alumina companies may experience multi-quarter margin improvement in Q3FY25, on the back of higher finished product prices and lower thermal coal prices, analysts at Elara Capital said.