Hindalco stock rises as Q2 earnings beat estimates; brokerages divided on outlook

Over the past 12 months, Hindalco stock has risen 35%, while Nifty rose 23% during the same period

Shares of Hindalco rose over 2% on November 12 after the company's fiscal second quarter (Q2FY25) earnings beat estimates. The metals and mining firm reported a jump in net profit to Rs 3,909 crore during the quarter, compared to Rs 3,298 crore in the year-ago period.

Hindalco's revenue from operations rose 7 percent to Rs 58,203 crore during the quarter under review, over Rs 54,169 crore in the year-ago period.

CLSA has issued a 'Buy' rating on Hindalco with a target price of Rs 800 per share, following the company’s strong Q2 performance. Hindalco reported an EBITDA of Rs 4,300 crore, surpassing estimates by 35%.

Notably, its aluminium EBITDA per tonne rose by $96 quarter-on-quarter, even with a $140 per tonne decline in the London Metal Exchange (LME) aluminium prices. This impressive result highlights Hindalco's operational resilience despite challenging market conditions, the brokerage said.

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Meanwhile, ICICI Securities has downgraded the stock to 'Add' from the Buy call earlier with a target price of Rs 790 as it believes that near-term concerns are likely to mar the stock performance.

According to the brokerage, the long-term outlook remains resilient with the ongoing capex at Bay Minette proceeding as envisaged and 420ktpa of beverage can capacity being already contracted at attractive prices.

Besides, the end-markets, particularly beverage cans, are doing well. However, the brokerage believes that profitability might be volatile in the near-term given the uncertainties around the sharp uptick in scrap price. While the company is taking mitigation measures, including using cheaper scrap and expanding the company's sourcing base, management is revising its EBITDA/te guidance, it noted.

As of 10:40 am, Hindalco shares were trading around a percent higher at Rs 660.75 on the National Stock Exchange (NSE). The stock has rallied around 8 percent this year, underperforming Nifty's 10% gain. Over the past 12 months, the stock has risen 35%, while Nifty rose 23% during the same period.

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