Hindalco Novelis Q4 Results Review - Ebitda/Tonne Bounces Back; Cautious Near-Term Outlook: ICICI Securities

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ICICI Securities Report

Hindalco Industries Ltd.'s arm Novelis’ Q4 FY25 Ebitda/tonne (adjusted) at $494 was the highest since Q1 FY25 largely on the back of positive operating leverage. Going ahead, management struck a cautious tone, tariff uncertainties still linger (though concerns are reducing) and elevated level of scrap prices seem to be structural.

On positive side, we expect higher recycling content and higher volumes as capacity bottlenecking projects ramp up in FY26. Taking cognisance of the prevailing LME Al prices, and Novelis’ profitability bottoming out, we raise our target price slightly to Rs 770 (earlier Rs 765) on an unchanged 6.3x FY27E Ebitda.

Maintain Buy.

Key risks

• Sharp drop in LME Al or metal premium.

• Lower-than-expected spreads at Novelis.

• Slower than expected ramp up of Indian downstream capacity.

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