Buy Hindalco Industries; target of Rs 770: ICICI Securities

ICICI Securitie`s research report on Hindalco Industries

Novelis’ Q4FY25 performance was in line with our estimates. Key points: 1) Operating leverage benefits resulted in EBITDA/te rebounding to USD 494; 2) sales volume rose 6% QoQ as beverage can market remains strong; 3) higher scrap prices are likely to be structural, prompting several interventions by management; and 4) FY26 management guided capex at USD 1.9-2.2bn while net debt/EBITDA likely to remain below 3.5x.

Outlook

Going ahead, while several uncertainties pertaining to tariffs, scrap spreads and end-market persist, we believe Novelis’ EBITDA may remain above USD 500/te overall. Taking cognisance of the prevailing LME Al prices, and Novelis’ profitability bottoming out, we raise our TP slightly to INR 770 (earlier INR 765) on an unchanged 6.3x FY27E EBITDA. Maintain BUY.