Accumulate Hindalco Industries; target of Rs 724: Prabhudas Lilladher

Prabhudas Lilladher's research report on Hindalco Industries

Hindalco Industries (HNDL) Q4FY25 delivered strong cons operating performance on strong India aluminium business and Novelis. Strong LME, higher alumina prices and lower operating cost aided Indian upstream aluminium business while superior product mix benefitted downstream as volumes were stable. Mgmt. guided flattish costs for Q1 and expect downstream EBITDA/t (targeting USD250-300/t) to witness improvement as most of the projects would see ramp up in FY26. Bandha coal mine has already received mining lease and mgmt. expects to receive full benefits from FY28E. Securing coal mine would aid HNDL to plan further upstream capacity additions at Mahan complex. Coal supplies from captive Chakla mine to start from Dec’26 (box cut by Apr’26) and full benefits are expected from FY28E (seems delay of two quarters again).

Outlook

We tweak our FY26/27E EBITDA estimates by -2%/2% respectively as we factor in lower AL prices of USD2,479/USD2,504 for FY26E/27E. At CMP, the stock is trading at EV of 6x/5.3x FY26/27E EBITDA. As uncertainty over Novelis EBITDA/t continues and stock has also run up ~10% in past one month, we downgrade it to ‘Accumulate’ from ‘Buy’ rating earlier with revised TP of Rs724 (earlier Rs736), valuing Novelis at 6.5x & standalone ops at 5.5x EV of Mar’27E EBITDA.

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