Buy Hindalco Industries; target of Rs 800: Anand Rathi

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26 Aug, 2025 12:21

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We recently attended Hindalco’s Investor Day 2025 where management unveiled ~$10bn expansion plan for Novelis and India, along with multiple strategic initiatives, which would help strengthen its market leadership. Novelis laid down a detailed plan under ‘3X30’ vision, which will help the company to focus on higher circularity (increasing the share of recycled products from 63% to 75%), reduce emissions and ensure industry-leading RoICs. Similarly, the domestic business targets to double its upstream presence and quadruple downstream business by FY30. The company has shifted its focus from being a metals producer to an engineering solutions provider, with innovation and a customer-centric approach at its core. Novelis reiterated its long-term EBITDA/tonne guidance of >$600, driven by operating leverage from scale, pricing and the product mix, coupled with operational efficiencies, cost optimization and enhanced usage of recycled input content. The 600k-tonne strategic expansion at Bay Minette is on track and is expected to be completed in H2 CY26. The company further plans to enhance its India aluminium smelting capacity by 180k tonnes to 1.52m tonnes by FY28.

Considering all the capex progressing per timelines, the strong capital allocation policy, the market-defining product portfolio mix, surging domestic demand, enhanced presence across downstream and the VAP portfolio, integrated domestic operations, etc., augur well for the company. We retain our Buy rating and a sum-of-parts TP of Rs800/share.

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