Sell Hindalco; target of Rs 550: Emkay Global Financial

Emkay Global Financial is bearish on Hindalco recommended sell rating on the stock with a target price of Rs 550 in its research report dated January 08, 2025.

Broker Research

January 09, 2025 / 12:43 IST

sell

26 Aug, 2025 12:21

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Emkay Global Financial's research report on Hindalco

Novelis has indicated that its Q3FY25 EBITDA could range at USD360-370mn (-21% QoQ; -14% vs Emkay). Q3 shipments are expected to range at 900-910kt – slightly lower than our estimate of 913kt, and 945kt shipments in Q2. This translates into decline in EBITDA/t to USD403 for Q3 vs USD489 in Q2 and earlier guidance of USD525. We think the Novelis pain is likely to persist for 2- 3 quarters at least. While the management was confident that it was not seeing end-demand slowdown during Q2 earnings, we are of the belief that moderation in auto and specialty segments has worsened in recent months. For us, the key catalyst now would be guidance reinstatement for a sustainable EBITDA/t in the near term which we think could end up lower than the earlier guidance of USD600/t in the medium term. We maintain SELL; TP is unchanged.

Outlook

In addition, we believe Hindalco's earnings momentum has matured for now, and our experience suggests that equities struggle to perform against moderation in earnings momentum. We therefore maintain our SELL rating, with unchanged target price of Rs550.

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