Hindalco Industries Ltd. stock has received a downgrade from domestic brokerage InCred with a sharp target price cut, given a weakening outlook for aluminium prices and increased balance-sheet pressure from higher capital expenditure. The share price has fallen over 13% since hitting a life high of Rs 1,024.05 on Jan. 29. On a 12-month basis, Hindalco is up 45%.
Analysts have downgraded the stock to 'reduce' from 'add', with a new target price of Rs 631 from Rs 785 earlier.
The brokerage noted that aluminium prices appear to have peaked, with a macro-driven rally and rising global scrap supply likely to trigger a 20% decline. Such a correction would weigh heavily on Hindalco's India operations, where profitability is closely tied to aluminium price trends.
InCred also highlighted that the company's elevated capex cycle will lead to higher leverage, a phase in which Hindalco's stock typically trades near 7.5 times EV/Ebitda, limiting valuation upside. The firm further expects consolidated Ebitda to fall from Rs 36,600 crore in FY26 to Rs 26,000 crore in FY28, driven by softer pricing, margin compression and increased balance-sheet strain. These factors collectively support the brokerage's more cautious stance and its reduced valuation estimate.
Moreover, Novelis, the Aditya Birla Group company's US subsidiary, is grappling with elevated electricity costs. A sharp rise in power demand across the United States—driven largely by AI infrastructure and expanding data centres—has pushed electricity prices significantly higher, eroding margins. With no meaningful relief in power costs expected in the near term, the brokerage anticipates that Novelis's Ebitda per tonne will remain under pressure, further strengthening the case for the downgrade.
ALSO READ: InCred Downgrades NALCO, Warns Of Tougher Times Ahead For Metal Producer
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
