ICICI Securities expects Hindalco's India performance to benefit from lower cost at upstream Al, despite waning alumina price tailwinds. In the near term, higher VAP from Alumina, Al and Cu divisions would lift overall margins. On the cost front, the brokerage expects further efficiencies only from FY28 when Chakla and Bandha blocks are ramped up.
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ICICI Securities Report
Hindalco Industries Ltd.'s Q4 FY25 performance was ahead of our/consensus estimates. Key points:
Consolidated Ebitda rose 44% YoY to Rs 96 billion, mainly due to upstream aluminium division.
Downstream Al Ebitda/tonne rose 46% YoY to $241 owing to better product mix.
Net debt was down 16% QoQ to Rs 353 billion with India business having net cash of Rs 75 billion.
Acquired Bandha coal block to meet the requirement of Mahaan Al plant. Going ahead, we expect the ramp-up of downstream capacities in both Al and Copper divisions and higher Specialty Alumina sales to support Ebitda.
We expect Hindalco's growth trajectory to remain on track, as new projects are on schedule. Retain Buy with an unchanged target price of Rs 770 based on 6.3 times FY27E Ebitda.
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