Hindalco may fit into ESG investment criteria: KIE

Mumbai: Hindalco might fit into the investment criteria of investors focused on Environmental, Social and Governance (ESG) investing, said Kotak Institutional Equities (KIE).

The brokerage has assigned a fair value of Rs 240 to the Hindalco stock, which fell 1.2 per cent to close at Rs 188.60 on Thursday.

“ESG-focused investors may want to make an exception for Hindalco from their negative stance of investing in metal & mining companies in general as Hindalco is primarily a downstream aluminum company,” said KIE analysts in a client note.


“We assume aluminium will have an important role to play in sustainable development (given its easy recyclability versus plastics, especially single-use plastics) in two large industries — automobiles (light-weight EVs and components) and beverages (recyclable cans).”

Kotak said Hindalco is hardly a typical commodity company with the bulk of its profits coming from the downstream converter business (automobile parts and beverage cans).

“The contribution of the downstream business could rise to 81 per cent by FY2021 on acquisition of Aleris (another downstream converter company) although it may have to shed parts of Aleris’ automotive components businesses to meet regulatory requirements,” the analysts said.