Shares of Hindalco Industries dropped two percent and the metal company emerged as the top loser on the Nifty 50 in response to its outlook that its subsidiary Novelis will continue to face headwinds in FY24. As of 9:38 am, the shares of the company were trading at Rs 399.20 on the BSE indicating a 0.8 percent drop.

Hindalco stated that its subsidiary Novelis, which has had a weak third quarter in FY23, would experience headwinds in FY24. However, the company believes the arm will be able to achieve its long-term target of $525 adjusted EBITDA per ton by the 4Q of FY24.

CLSA, which has a ‘buy’ recommendation on the stock with a target price of Rs 550, observed that Hindalco has reiterated its medium-term guidance and capital expenditure is being paced out. The foreign brokerage firm pointed out that no details were provided on factors driving the weakness and the items to monitor for recovery. It further added that a bounce back in profitability of the company is the key to a rerating.

Motilal Oswal Financial Services believes that Hindalco is enlarging downstream capacities to capture strong growth opportunities. Despite near-term headwinds for Novelis, the long-term outlook for the company is positive. The firm has retained its ‘buy’ rating with a target price of Rs 510.

Satish Pai, who is the Managing Director of Hindalco, said after the December quarter results that “the worst is over” and expects a turnaround for the arm in the March quarter with higher aluminium and copper prices, better coal availability and an improvement in the shipemnts of cans.

Hindalco has emerged as the most favoured pick among analysts in March with ‘buy’ calls coming from 24 analysts according to Moneycontrol’s Analyst Call Tracker for the same month.