Hindalco Industries Q3 Review: Analysts Positive After Earnings Beat

Hindalco Industries Ltd. retained positive stock ratings from brokerages after it delivered better-than-expected results in the third quarter. JPMorgan, CLSA and Investec maintained their rating and target prices on the stock.

The company reported 4% higher operating profit in its India business than JPMorgan's estimates. Its aluminum business and copper segment also beat the estimates. JPMorgan anticipates positive stock movement on Friday.

However, traders will be watching price changes on London Metal Exchange and in the US, according to the brokerage. Impact from US tariff, the pace of fall in aluminum prices, and trajectory of UBS scrap spread will also be a key monitorable for market participants.

Hindalco Industries' aluminum Ebitda has peaked in the third quarter, JPMorgan said. The recent fall in aluminum prices will also weigh on profitability. The brokerage now awaits Hindalco Industries' conference call before forming further view.

CLSA will be looking out for commentary on cost, pricing, and hedging impact, and benefit of aluminum sales during the conference call, it said in a note. Hindalco Industries reported third quarter performance, largely in line with the brokerage's estimates.

Securing Meenakshi coal block with 12 million ton capacity is a key positive for Hindalco Industries, according to CLSA. The coal block will cater 75% of coal requirement.

Hindalco Industries' consolidated net debt stands at Rs 41,800 crore compared to Rs 36,000 crore in the second quarter because of its American subsidiary Novelis, CLSA said. The company has given a positive outlook for Novelis. Its fourth quarter profitability will be helped by beverage can pricing mix, high volume, and high recycled content.

There was no surprise in Hindalco Industries' third quarter performance, according to Investec. The brokerage waits for incremental return on capital employed and capital expenditure in India.

Hindalco Industries did not mention next phase of expansions. The management had earlier mentioned three projects— 850-kiloton aluminum refining by financial year 2028, 280–300 kiloton copper smelter by 2029, and 180-kilotonn ally smelter by October 2027, with each project estimated at Rs 8,000 crore. Hindalco Industries has also signed Memorandum of Understanding with oil marketing companies. "We await further clarity on aforesaid next phase of India expansions and importantly justification around incremental ROCE."