Hindalco Q3 Results Review: Systematix Maintains 'Buy' On The Stock, Lowers Target Price — Here's Why

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Systematix Research Report

Hindalco Industries Ltd.’s Q3 FY25 consolidated Ebitda of Rs 76.0 billion (+26%/-5% YoY/QoQ), was 11% below our estimate of Rs 85 billion. Segment Ebitda of Rs 81 billion was 5% below our estimate, impacted by weak volumes and margins at Novelis.

Novelis reported quarterly shipment of 904kt (-1%/-4% YoY/QoQ), with an adjusted Ebitda of $406/tonne (-19%/-20% YoY/QoQ). India upstream segment Ebitda increased 73%/14% YoY/QoQ to Rs 42.2 billion, with margins averaging at 42% (versus 41%/31% in Q2 FY25/Q3 FY24), driven by lower input costs. The downstream segment reported Ebitda of Rs 1.5 billion (+46%/-3% YoY/QoQ), with Ebitda/tonne at $179/tonne (+31%/+1% YoY/QoQ).

The copper segment reported Ebitda of Rs 7.8 billion (+18%/-6% YoY/QoQ). India aluminium upstream, downstream, and copper segment sales volume during the quarter were reported at 338kt (+2%/+3% YoY/QoQ), 99kt (+10%/-4% YoY/QoQ), and 120kt (+1%/+3% YoY/QoQ), respectively. Consolidated Q3 revenue of Rs 584 billion increased by 11% YoY and flat sequentially, was short of our estimates by 4%.

Hindalco has outlined a capex of Rs 400 billion for India upstream business spanning over three-four years for alumina refinery, aluminium smelter, and copper smelter expansions. Consolidated net debt as of December 2024 was Rs 418 billion versus Rs 360 billion in Q2 FY25 with India business at a net cash position of ~Rs 19 billion. We maintain Buy rating on the stock based on SOTP FY27E EV/Ebitda with a revised target price of Rs 735/share (Rs 821/share earlier).

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