Brokerages raise Hindalco's target price as subsidiary Novelis beats Q4 estimates

CLSA also shared a 'buy' call and gave a target price of Rs 770, seeing further levers of margin improvement for the company.

"Novelis's profitability was above guidance, while volumes saw a modest uptick. We see further levers of margin improvement for Novelis, such as price revisions, rise in recycling content, and operational efficiencies. Novelis' debt-reduction is also in line with seasonality," the brokerage firm added.

The company's net income rose by 6 percent year on year (YoY) to $166 million in Q4FY24, due to higher adjusted EBITDA, which climbed by 28 percent YoY to $514 million.

This significant improvement was primarily driven by favourable recycling and lower operating costs than the corresponding period a year ago, said the management in an exchange filing.

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Novelis is a subsidiary of Hindalco Industries and the metals flagship company of the Aditya Birla Group.

The stock of Hindalco has surged over 12 percent in the past one month, outpacing a 0.3 percent decline in the benchmark Nifty 50 index.

Given the outperformance, analysts at Nuvama shared a 'hold' rating on the stock, seeing limited upside ahead. "We should wait for lower entry points to re-enter the stock," they said, hiking target price to Rs 651 from Rs 508 earlier.

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