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Non-Ferrous Metals witness sharp pricing upswing; benefitting Indian Metal Conglomerates

ICICIdirect Research 26 Dec 2025 DISCLAIMER

Non-ferrous prices have recently witnessed a sharp surge with LME aluminum and zinc reaching 3 years high of ~$2,900 per ton and ~$3,300 per ton.
More importantly, copper and silver prices have touched multi-year highs of ~$12,000 per ton and ~$75 per ounce.
The rally has been driven by incremental demand from sunrise sectors such as electric vehicle, renewable energy, and AI data centers, along with global supply-side disruptions.
We expect our coverage companies, Vedanta and Hindalco to benefit from the recent sharp rise in non-ferrous prices.
However, we have a HOLD rating on Hindalco as capacity expansion led volume growth is likely to materialize only from FY28 onwards, while the performance of its US subsidiary i.e. Novelis is expected to be subdued due to higher US tariff and the fire incident at its Oswego facility.
We remain positive on Vedanta as it is expected to be the largest beneficiary of the recent uptrend in non-ferrous prices, supported by expanded aluminium capacities, controlled leverage on the balance sheet, return ratios exceeding 20%, and an attractive dividend yield of ~6%.
We have a BUY rating on Vedanta at a target price of ₹650.
Though Hindustan Zinc is the largest producer of silver in the country; however, we prefer playing it through Vedanta which is its promoter holding company.
Interestingly, top 5 companies operating in the non-ferrous space domestically are executing an annual capex of ~₹ 30,000 crore + which is 2x of the capex executed in FY24-FY25.

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