Hindalco's record quarterly performance has strengthened the case for its aluminium and copper businesses, but the outlook for the next few quarters remains more nuanced. Strong upstream profitability, record copper Ebitda and improving downstream performance supported earnings. However, aluminium cost pressures and the pace of recovery at Novelis remain key monitorables.
Brokerages differ on the extent of further upside. CLSA retained Outperform and raised its target price to Rs 1,280 from Rs 1,240, citing the company's expansion pipeline. Citi maintained Neutral but cut its target to Rs 1,050 from Rs 1,140, pointing to limited upside in aluminium prices and near-term cost pressures. Kotak retained Buy with a target of Rs 1,200.
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Hindalco Q2 Highlights (Consolidated, QoQ)
- Revenue at Rs 91,708 crore versus the estimate of Rs 83,546 crore; up 8.1% sequentially from Rs 84,825 crore.
- Ebitda at Rs 12,814 crore versus the estimate of Rs 11,486 crore; down 8% sequentially from Rs 13,932 crore.
- Ebitda margin at 14% versus the estimate of 13.7% and 16.4% in the previous quarter.
- Net profit at Rs 7,532 crore versus the estimate of Rs 6,108 crore; up 7.4% sequentially from Rs 7,013 crore.
- Reported a one-time gain of Rs 284 crore, compared with a loss of Rs 2,299 crore in the previous quarter.
Here's what brokerages are saying after Hindalco announced Q2 results
Citi
- Maintained 'Neutral'; target price cut to Rs 1,050 from Rs 1,140.
- Q2 Ebitda came in below estimates.
- Novelis Ebitda remained stable in Q1.
- Consolidated net debt-to-Ebitda improved to 1.8 times from 1.95 times.
- Expects cost pressures to ease in Q4.
- Sees limited upside in aluminium prices from current levels.
CLSA
- Maintained 'Outperform'; target price raised to Rs 1,280 from Rs 1,240.
- Approved expansion pipeline of Rs 520 billion supports long-term aluminium and copper growth.
- Expects aluminium costs to peak in Q3FY27 before moderating in Q4.
- Raised FY27–FY29 Ebitda estimates by 3–9%.
- Expects leverage to remain below two times.
Kotak
- Maintained 'Buy'; target price at Rs 1,200.
- Expects Novelis operations to normalise gradually in the second half of FY27 following Oswego disruptions.
- Elevated copper margins are likely to sustain, while aluminium costs could pressure near-term profitability.
- India expansion projects remain on track, with leverage expected to peak in FY27.
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