The brokerage wrote in its note that tariff-driven pressures and tightness in the scrap market are emerging as dual challenges.
It also mentioned that a potential decline in metal prices and shrinking recycling margins are the two key risks for the industry.
Avendus Spark reiterated its negative stance on both stocks.
For Hindalco, the brokerage maintained a ‘Sell’ rating with a price target of ₹615 per share.
It said that the stock is already factoring in sustained strong margins in Indian operations, while expecting Novelis margins to normalise to $500 per tonne, compared to $430 per tonne in Q1 FY26. Benefits from the Bay Minette expansion project, it added, are at least 15 months away.
For NALCO, the rating was cut to ‘Reduce’ with a price target of ₹185.
Avendus Spark warned that a fall in metal prices could drag earnings, while the probability of a meaningful recovery in alumina prices remains low due to rising global supply.
