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Motilal Oswal Report
Hindalco Industries Ltd.'s Indian operation is net debt free and the company's consolidated ND/Ebitda ratio improved to 1.21 times as on March-24 versus 1.43 times in December 2023.
Though the ongoing capex at Novelis would position Hindalco as the global leader in beverage cans and automotive FRP segments, any further extension in the capex timeline, along with an increase in capex outlay, will put pressure on the cash flow of the company. Its capex would be a key monitorable for any further cost revisions or delays.
Volume growth across geographies is expected to remain stable going forward and Hindalco has already secured long-term contracts from marquee customers for its Bay Minette facility, which provides future revenue visibility. Therefore, with favorable pricing and muted costs,
Novelis will see its Ebitda/tonne improve further in the mid-to-long term. We reiterate our Buy rating on Hindalco with our SOTP-based target price of Rs 800. The stock is trading at 6.5 times FY26E enterprise value/Ebitda and 1.5 times FY26E price/book.
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