Broker’s call: Hindalco (Sell)

Target: ₹600

CMP: ₹661.25

We attended Hindalco’s Investor Day 2025. The management outlined its expansion roadmap, with capex plans of ₹45,000 crore for its India business and $5 billion for Novelis over coming 5 years. Hindalco targets doubling its upstream business and quadrupling the downstream business in India.

Our key takeaway is that the management is indicating EBITDA/t of $500 in the near term. The management reaffirmed its long-term guidance of $600/t, which is predicated on full ramp up at the Bay Minette project that is due for commissioning in H2-CY26.

We think this clears any ambiguity around the path from current to potential profitability where we note Consensus estimates were highly diverse.

Our Sell rating was predicated on concerns around scrap cost and Novelis’s margins, negative Cu TC/RCs, and valuation excesses that built in the lead up to the Novelis IPO last year which was later called off. We see that concerns are already in the price. The market appears to have priced out excess valuation optimism as well. Therefore, we raise our EV/EBITDA multiples to 6x from 5-5.5x, as we think reduced multiples are no longer warranted; hence, we raise our blended TP to ₹600 by about 9 per cent . Nevertheless, we think positive levers are still out of sight, for us to take a constructive view.