Hindalco Industries' stellar first-quarter performance has triggered a wave of optimism among global brokerages, driven by a sharp operational recovery at its US subsidiary Novelis, strong domestic traction, and a steady roadmap for capacity expansion. Leading financial institutions including HSBC, UBS, and JP Morgan have maintained their bullish stances on the stock with raised target prices, while Jefferies opted for a more cautious outlook on near-term profitability moderation.
Hindalco Q1 Results
The Aditya Birla Group company posted a consolidated net profit of Rs 7,013 crore for the first quarter, significantly ahead of the Bloomberg consensus estimate of Rs 5,614 crore. Net profit also surged from Rs 2,597 crore in the previous quarter.
Also Read | Layoffs Are Rising In Tech, But These Skills Are Helping People Unlock Better Pay
ALSO READ: Fortis Healthcare Q1 Review: Analysts Bullish Despite Short-Term Margin Pressure - Should You Buy?
Revenue from operations rose 8.6% sequentially to Rs 84,825 crore from Rs 78,133 crore. However, the top line came in slightly below analysts' estimate of Rs 86,476 crore. Operating performance was the standout, with Ebitda jumping 39.1% quarter-on-quarter to Rs 13,932 crore from Rs 10,018 crore, comfortably beating the Street estimate of Rs 11,011 crore.
Here is a detailed look at how top global brokerages analyzed Hindalco's Q1 print:
HSBC & UBS: The Strongest Bulls on the Street
HSBC maintained its 'Buy' rating on Hindalco with a Street-high target price of Rs 1,430. The brokerage underscored a massive Q1 beat, with consolidated EBITDA soaring 37% quarter-on-quarter to Rs 139.7 billion. According to the bank, Novelis earnings are poised for further recovery as operations at the Oswego plant restart. HSBC also highlighted that potential insurance receipts and working-capital release will accelerate the company's deleveraging process.
The brokerage also noted that multiple growth catalysts-including the Bay Minette commissioning and domestic aluminium and alumina capacity expansions-leave ample room for a stock re-rating. HSBC pointed out that at current market prices, Novelis' implied valuation is a mere ~2x FY28E EV/EBITDA, leaving significant scope for upside as operational hurdles fade.
UBS shared a similar level of optimism, retaining its 'Buy' call with a target of Rs 1,325. The brokerage noted that the Q1 EBITDA of Rs 140 billion outpaced its own estimates by a whopping 29%, powered by outperformance across its copper, Novelis, and upstream aluminium divisions. UBS views Novelis' deleveraging as a critical catalyst for the stock, predicting a $300-400 million working-capital release and a target leverage ratio falling below 4x by the end of FY27.
ALSO READ: Oil Prices On Aug. 10: Brent Crude Nears $85 On Uncertainty Over Reopening Of Strait Of Hormuz
JPMorgan: Growth "Within Sniffing Distance"
JPMorgan retained its 'Overweight' stance on Hindalco, hiking its target price to Rs 1,205 from Rs 1,190. The brokerage emphasized that the company's next major phase of growth is "within sniffing distance." Hindalco's expansion projects remain on track, with the Phase 1 aluminium smelter expected to be commissioned by December 2027, which will generate meaningful volumes by FY29. Captive coal mines are set to yield ~1.5 million tonnes in FY28, providing major cost savings.
Addressing leverage, JPMorgan observed that consolidated net debt-to-EBITDA ticked up slightly quarter-on-quarter to 1.95x from 1.83x, largely driven by Novelis. Management has reiterated that FY27 will be a capex-heavy year, even for the India business. However, JP Morgan expects the consolidated Net Debt/EBITDA ratio to remain stable in the coming quarters and likely begin declining by the fourth quarter of FY27.
ALSO READ: 'FY27 Earnings Unlikely To Disappoint': Kenneth Andrade Spots Long-Term Winners In Auto, Pharma
Jefferies: Cautious on Peak Margins, But Sees Value
Striking a more conservative tone, Jefferies maintained its 'Hold' rating while slightly tweaking its target price higher to Rs 1,100 from Rs 1,075. The brokerage noted that consolidated EBITDA surpassed estimates by 20% on the back of the sharp Novelis recovery and solid India earnings. In the domestic market, EBITDA climbed 26% QoQ on stronger realizations for aluminium and sulphuric acid.
However, Jefferies anticipates this profitability to moderate from its Q1 peak in the coming quarters. Despite the cautious near-term margin outlook, the brokerage conceded that Hindalco's valuations remain highly reasonable, with the stock trading at 1.4x FY27E price-to-book (P/B) and 6.3x enterprise value-to-EBITDA, according to the latest analysts' estimates.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
