This Vedanta group stock sees target price rise, here’s why

A few weeks ago, zinc prices were squeezed by fears of a surplus in China, while aluminium prices soared on demand from sectors such as power transmission, renewable energy, electric vehicles, and data centres. That meant Hindalco outperformed Hindustan Zinc for much of the year. However, the trend may have started to reverse.

The spot price of zinc is now 15% above the average price in the June quarter, while aluminium is 10% below, according to a note from Jefferies, which raised the target price on Hindalco and Hindustan Zinc, while rating them as ‘hold’ and ‘buy’ respectively.

Stock	Target price	Implied gains
Hindustan Zinc	₹750	+26.7%
Hindalco	₹1,140	8.9%

As the only listed silver play in India, Hindustan Zinc (a Vedanta Group company) may also benefit from the recent spike in silver prices, which have jumped over 23% from the lows it hit in July. Despite being more volatile than gold, silver has emerged as the best-performing precious metal by compounded annual returns over the last five years.

Given the recent rebound in silver prices, some see a cool-off in the coming quarters. “From a short-term perspective, I think in the next couple of quarters, it is very possible that silver may underperform,” Harshal Barot, Senior Consultant-South Asia & Middle East at Metals Focus, told CNBC-TV18 on Tuesday. “Once probably gold achieves or nears the all-time highs, that’s when I think we expect silver prices to start picking up and then maybe eventually outperform gold over a two- or three-year horizon.” You can watch the full interview here:

Read more: This $5 billion chemical stock can surge 25%, says Jefferies