Hindalco Industries Ltd. share price target

Hindalco’s (HNDL) Q3FY25 performance was ahead of our/consensus estimates. Consolidated EBITDA
rose 30% YoY to INR 76bn, mainly due to upstream aluminium (Al) division. HNDL secured 12mtpa Meenakshi coal mine, providing a significant boost to coal security.

3QFY25 consolidated net sales stood at INR584b (+11 YoY/flat QoQ), in line with our est. of INR595b, aided by better realization.

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

Hindalco delivered a strong upstream performance that is on a firm foot vs a starkly different downstream performance with bleak near-term outlook for Novelis, balancing out one another in Q2 and resulting in EBITDA beat of 9.5% at business segment level.

We maintain our BUY rating.

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.

HNDL’s consolidated net sales stood at INR582b (+7 YoY/+2% QoQ) in2QFY25 vs. our est. of INR569b, aided by better realizations and efficiencies in India operations.

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.