Nickel Industries (ASX:NIC) Shares Look Cheap As HPAL Progress Meets Funding Risk

Nickel Industries came into this result with a stock that had climbed about 13% over the past month, yet still trades at A$0.875 and a low 1.6x Price to Sales multiple. The market has treated it as a nickel producer with promise but patchy profitability. Today’s H1 2026 numbers put one issue front and center. Earnings before interest, tax, depreciation and amortisation jumped to US$247.6m and group net profit reached US$74m, which sharply contrasts with recent losses on a trailing twelve month view.

Is Nickel Industries a genuine deep discount at a 1.6x P/S and a modelled A$5.37 intrinsic value, or is the low price a warning sign about future profitability risk? Map that gap using the valuation analysis for Nickel Industries

H1 2026 Earnings Summary

• Total Revenue (H1 2026 vs H1 2025): US$938.4m vs. US$829.7m (up about 13%)
• Net Income (Excl. Extra Items, H1 2026 vs H1 2025): US$52.5m vs. US$11.3m (very large increase from a much lower profit base)
• Basic EPS (H1 2026 vs H1 2025): US$0.0121 vs. US$0.0026 (very large increase per share from a low starting point)
• Nickel Production (H1 2026 vs H1 2025): Not disclosed for H1 2026 vs. 49,806 tonnes in H1 2025 (prior year volume reference only, current period not stated)

Prefer clear visuals instead of another wall of earnings tables and footnotes? View Nickel Industries' full financial picture, with a focus on its latest profitability profile, in an easy-to-scan visual format through the company report for Nickel Industries.

Nickel Industries bull case hinges on HPAL delivery

Bulls argue Nickel Industries is turning into a higher margin battery materials producer, not just an RKEF nickel pig iron exporter. H1 2026 gives evidence that this shift is underway but not yet fully proven. Adjusted EBITDA of US$247.6m with a meaningful US$35.2m from the HNC high pressure acid leach, or HPAL, joint venture shows battery chemicals are already contributing. ENC has hit important commissioning milestones, with first mixed hydroxide precipitate in July and first cathode in August, and two autoclaves running at about 50%. Mining EBITDA of US$73.4m and higher EBITDA per tonne in June support the low cost ore supply leg of the story. The company is tracking against the operational roadmap that bulls point to, although full validation depends on ENC reaching nameplate capacity and securing repeatable sales of higher purity output.

Bear case focuses on execution, pricing and leverage risks

Bears worry that Nickel Industries is heavily exposed to Indonesian supply growth, volatile nickel prices and large project and payment commitments. H1 2026 results do not remove those concerns but they do add nuance. RKEF EBITDA of US$146.7m relied on a rebound in NPI pricing while cash costs rose, so margin strength is tied closely to price conditions. ENC commissioning is progressing, yet water constraints in the dry season and sulfur cost pressures show that execution risk is real. Leverage is about 2.3x against a 3.5x covenant and there are sizeable TMI and Sampala payments in 2026 and 2027, so the company still needs strong cash generation and access to funding. The share price is up about 13% over 30 days but down about 17% over 90 days, which signals that the market remains cautious about these structural risks.

Reveal how Nickel Industries' HPAL progress, reliance on RKEF and leverage profile line up against institutional expectations and recent share price moves by checking the consensus price target analysis for Nickel Industries.

Take Control of Your Next Move

If Nickel Industries' recent swing back to profit and its mix of RKEF and HPAL exposure has your attention, register for free with Simply Wall St and add it to a Watchlist to track the share price against fair value and watch for a more attractive entry point. Once you are invested, use the Portfolio Command Center to cut through market noise and focus on key earnings, balance sheet and cash flow changes that matter to your returns. For a longer term view, lean on the shared insights and debates inside the Community to see how other investors are thinking about nickel prices, HPAL progress and funding risk. By spotting potential catalysts and red flags early, you put yourself in a stronger position to stay ahead of the market.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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