Nickel Industries Shares Price Target Raised, Analyst Remains Bullish

Nickel Industries shares (ASX: NIC) have won a strong vote of confidence from UBS, which reiterated its Buy rating and lifted the price target 26% to A$1.20, citing a strategic shift towards higher-margin battery-grade nickel that could materially boost earnings over the next three years.

Shares in Nickel Industries closed 1.05% higher at A$0.96 on the ASX, extending the stock’s year-to-date gain to 6.67% and capping an impressive 33% rally over the past twelve months. The modest daily move belies the significance of UBS’s upgrade, which projects FY26-28 earnings growth of between 23% and 121% depending on the year, driven by a combination of new high-pressure acid leaching deals, an updated nickel price deck, and the imminent commissioning of the Excelsior Nickel Cobalt project.

The A$1.20 price target implies upside of approximately 25% from current levels, positioning Nickel Industries as one of the broker’s preferred exposures in the nickel space. Markets have responded positively to the company’s transformation over the past year, with the stock outperforming many peers as it pivots from traditional nickel pig iron production towards battery-suitable products.

Driving Nickel Industries Shares

Strategic Pivot to Class 1 Nickel

At the heart of UBS’s upgraded thesis lies Nickel Industries’ recent acquisition of stakes in two high-pressure acid leaching projects, which together add approximately 17,000 tonnes of nickel in mixed hydroxide precipitate for a combined cash outlay of around US$169 million. The deals represent a calculated bet on one of the few remaining attractive Indonesian HPAL opportunities, according to UBS, and advance the company’s diversification into Class 1 nickel while minimising shareholder dilution.

Both projects benefit from ore feed agreements with Sampala and carry construction and capital expenditure guarantees from Tsingshan, the world’s largest stainless steel and nickel producer. These structural protections significantly de-risk execution, addressing one of the primary concerns markets have historically held about HPAL projects, which are notoriously complex and capital-intensive to bring online.

The CNE and TMI investments complement Nickel Industries’ existing push into battery-grade products through the Excelsior Nickel Cobalt project, which is nearing commissioning in the first half of 2026. The company recently increased its stake in ENC from 44% to 46% for US$46 million, signalling management’s confidence in the project’s economics. In a further display of proactive cost management, Nickel Industries secured sulphur inventory for ENC’s start-up through September 2026 at approximately US$450 per tonne, well below spot prices at the time of purchase, locking in attractive input costs during the critical ramp-up phase.

Debt Restructure Improves Financial Flexibility

Underpinning the growth strategy is a February 2026 debt refinancing that has materially extended loan maturities and reduced near-term cash flow pressure. Nickel Industries executed US$450 million in syndicated unsecured loan facilities and restructured existing bank debt, eliminating significant amortisation payments that would have otherwise constrained liquidity during a busy period of capital deployment.

The refinancing, which also reduced the overall cost of debt, came alongside confirmation of a 2026 RKAB ore quota of approximately 14.3 million wet metric tonnes for the Hengjaya mine. UBS noted that Nickel Industries enjoys a favourable RKAB allocation relative to peers, a function of its integrated mine-to-processing model that has positioned the company as a strategically important player in Indonesia’s downstream nickel ambitions.

The improved balance sheet provides management with strategic flexibility to fund HPAL ramp-ups, pursue incremental growth opportunities, or potentially consider shareholder returns once operations stabilise and cash generation improves. Markets have interpreted the willingness of lenders to extend unsecured facilities at improved terms as an external validation of Nickel Industries’ business model and execution track record.

Operational Strength

While the HPAL investments capture headlines, Nickel Industries continues to generate cash from its base business of rotary kiln electric furnace operations. First-quarter 2026 results showed stronger EBITDA, primarily driven by improved realised nickel prices and solid production from RKEF lines, which produced approximately 274,000 tonnes of nickel pig iron during the period. Contained nickel was modestly down quarter-on-quarter due to ore grade variations, but overall operational performance remained robust.

The company’s RKEF assets provide both a stable cash flow foundation and optionality, with some lines being converted to produce nickel matte, another battery-suitable intermediate product. This dual approach—maintaining NPI production for stainless steel markets while pivoting towards Class 1 products for the battery supply chain—offers diversification across end markets and reduces dependence on any single demand driver.

What To Watch

UBS’s constructive stance on Nickel Industries is underpinned by a more positive medium-term view on nickel fundamentals. The broker cited reset expectations for electric vehicle and ternary battery demand, which have moved from over-optimistic projections to more realistic levels, improving visibility. Robust stainless steel demand and supportive supply-side cuts, including project deferrals and production curtailments, are expected to tighten the market balance over the next several years.

The UBS valuation model uses a long-term nickel price of US$8.00 per pound and an AUD/USD exchange rate of 0.70, assumptions that sit comfortably within the mid-range of sector forecasts. However, the broker explicitly flagged Indonesian policy as a key watch point, acknowledging that regulatory changes to export rules, RKAB quota regimes, or local ownership requirements could materially impact the investment case.

Indonesia has been the epicentre of nickel supply growth over the past five years, leveraging abundant laterite ore reserves and supportive government policies to attract downstream processing investment. While this has positioned Indonesia as the dominant global supplier, it has also created concentration risk for companies like Nickel Industries, whose entire growth engine is Indonesia-centric.

The upgrade for Nickel Industries shares crystallises a compelling narrative: if nickel prices stabilise around US$8.00 per pound and Indonesian policy remains supportive, the company’s HPAL investments and debt restructure position it for material earnings growth and margin expansion through FY28. However, the bull case remains contingent on flawless execution across multiple complex projects, stable commodity prices, and continued regulatory cooperation from Jakarta, a combination that leaves ample room for disappointment if any element falters.