Buy Hindalco Industries; target of Rs 597: Prabhudas Lilladher

Prabhudas Lilladher is bullish on Hindalco Industries has recommended buy rating on the stock with a target price of Rs 597 in its research report dated February 13, 2024.

Broker Research

February 15, 2024 / 14:39 IST

Buy

26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Hindalco Industries

Hindalco Industries (HNDL) 3QFY24 consolidated revenue remained flat YoY at Rs 528bn (PLe Rs 538bn) despite weak Novelis volumes aided by strong copper realization. Novelis’ Flat Rolled Products (FRP) volumes declined 2% QoQ to 910kt (flat YoY; PLe 926kt) in a seasonally weak quarter. Mgmt. indicated improving demand scenario for beverage can volumes as S. America is seeing strong start to summer. Auto and Aerospace demand remains strong across regions. However, Novelis announced ~46% increase in total capex requirement for its ongoing Bay Minette greenfield project. Revised capex is USD4.1bn now with expected commissioning in 2HCY26. The capex overrun is on account of higher inflation in civil, structural and staff costs. All equipment have been ordered, so there is less chance of further revision in capex. Consolidated EBITDA increased 5% QoQ to Rs 58.6bn (PLe Rs51.4bn) on lower fuel costs in India and better Novelis performance.

Outlook

Given delayed commissioning and cost overruns in US project, its profitability is expected to get impacted. Novelis guided higher EBITDA/t of USD600/t over long term on higher operating leverage. In the near term, Novelis will continue to perform well with improving demand across segments. We have revised our capex estimates leading to higher FY26 net debt and subsequently cut the TP. At CMP, stock is trading at EV of 5.6x/5.2x FY25E/FY26E EBITDA respectively. Retain ‘Buy’ rating with revised TP of Rs597 (earlier Rs673) valuing Novelis at 6.5x EV of Mar’26E EBITDA.

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