Hindalco Industries Ltd. share price target

Hindalco Industries’ strategic expansion in Bay Minette is on track and the recently commissioned 250k tonne Guthrie facility is ramping up, with production having commenced in Q2.

We downgrade Hindalco to SELL from Reduce following a disappointing outlook from Novelis. We had recently initiated coverage on Hindalco indicating that the stock is pricing in all the positives and a part of that optimism was around Novelis in the lead up to its IPO, which was later called off.

We maintain our BUY rating.

Hindalco Industries’ (HNDL) Q1FY25 consol. EBITDA was 5% ahead of Street’s estimate. Record copper (Cu) EBITDA of INR 8.05bn.

Consolidated net sales stood at INR570b (+8 YoY/+2% QoQ), largely in line with our estimate of INR583b, aided by better realizations and efficiency in India operations.

Novelis’ Q1FY25 performance was in line with our estimates. Shipments at 951kt (up 8% YoY) were slightly ahead of our estimate of 947kt, beverage can market is back to normalcy with Latin American volume rising 29% YoY.

Hindalco (HNDL) is undertaking a capex of ~USD6.9b (USD4.9b for Novelis
and USD2b for HNDL) to expand capacities for several products across
multiple locations over the next three to five years.