Hindalco Industries Share Price Target at Rs 770: ICICI Securities
ICICI Securities has reiterated its BUY call on Hindalco Industries and slightly raised its 12-month target price to Rs 770 from Rs 765, implying an 18% upside from the current price of Rs 652. The upgrade comes after Novelis—Hindalco’s wholly-owned subsidiary—posted a sequential recovery in Q4FY25 EBITDA/tonne to USD 494, supported by operating leverage and stable scrap prices. Despite macro headwinds such as elevated scrap costs and global tariff concerns, Hindalco remains structurally well-positioned, thanks to ongoing capex, a favorable product mix, and robust beverage can demand. Analysts expect the profitability trajectory to improve further in FY26 as debottlenecking projects and high-margin segments ramp up.
Novelis EBITDA/te Rebounds, Supported by Beverage Can Demand
Novelis, the North American subsidiary of Hindalco, saw a 6% QoQ growth in volumes and delivered an EBITDA/tonne of USD 494—its highest since Q1FY25. Despite being 9% lower YoY, the figure beat estimates and marked a healthy 21.7% sequential increase.
Total EBITDA stood at USD 473 million, marginally ahead of estimates (USD 468 million).
Volume for Q4FY25 came in at 957 Kt, with strong showings in Europe (up 17.3% QoQ) and Asia (up 8.1% QoQ).
Beverage can packaging, which accounted for 60% of FY25 shipments, continues to be the strongest segment.
ICICI Securities noted that positive product mix effects added USD 30 million YoY to profitability, and the mid-west premium remains high, aiding margins.
Structural Shift in Scrap Pricing and Strategic Response
While scrap prices remain structurally elevated, management confirmed that they have stabilized in recent months. The company expects to offset some cost pressure through operational efficiencies.
Hindalco achieved a recycling content of 63% in FY25, and expects this to rise further in FY26 due to new capacities at Guthrie and Uksan.
Tariff-related costs continue to pose headwinds, with an estimated USD 40 million quarterly impact.
Despite these challenges, Novelis’ EBITDA margin in Europe surged 81% QoQ due to favorable pricing and volume mix.
Capex Momentum Continues with Focus on Bay Minette
Hindalco's aggressive capex cycle is on track, with management guiding for USD 1.9–2.2 billion in FY26, including USD 300 million in maintenance capex.
The flagship Bay Minette project has reached 90% engineering completion, with USD 1.6 billion already invested out of the total budgeted USD 4.1 billion.
Debottlenecking projects totaling 175 Kt will be completed in FY26, further supporting volume growth and margin improvement.
The company is likely to raise USD 750 million in FY26 to support the Bay Minette rollout while maintaining net debt/EBITDA below 3.5x.
Robust Earnings Performance and Upward Revisions
Hindalco’s consolidated EBITDA for FY25 stood at Rs 3,04,233 million, representing a 27.4% YoY increase, with strong contributions from Novelis and improved Indian downstream business.
Net profit jumped 48.7% YoY to Rs 1,50,709 million.
Earnings Per Share (EPS) rose to Rs 67.7, with forecasted growth to Rs 70.1 by FY27.
Despite slightly lower EBITDA margins projected for FY26 (12.1%) and FY27 (11.9%), absolute EBITDA is expected to remain steady.
Financial Snapshot
| Metric | FY24 | FY25 | FY26E | FY27E |
|---|---|---|---|---|
| Net Revenue (Rs mn) | 21,59,620 | 23,03,201 | 26,75,746 | 27,57,345 |
| EBITDA (Rs mn) | 2,38,720 | 3,04,233 | 3,24,105 | 3,28,856 |
| Net Profit (Rs mn) | 1,01,550 | 1,50,709 | 1,53,585 | 1,56,215 |
| EPS (Rs) | 45.6 | 67.7 | 69.0 | 70.1 |
| EV/EBITDA (x) | 7.5 | 5.7 | 5.7 | 5.4 |
| RoE (%) | 10.9 | 14.2 | 12.9 | 11.6 |
Liquidity and Leverage Under Control
The company’s free cash flow before capex in Q4FY25 was USD 692 million, though total free cash flow came in lower at USD 178 million due to a USD 514 million capex outlay.
Net debt/EBITDA stood at 2.4x, reflecting strong financial discipline amid high investment activity.
With the FY26 capex plan including significant investments in downstream and recycling, Hindalco is focused on maintaining balance sheet strength.
Stock Levels and Investor Outlook
At a current market price of Rs 652, ICICI Securities’ revised target of Rs 770 offers 18% potential upside. Based on technical and fundamental indicators:
Support level: Rs 615
Resistance zone: Rs 690–705
Target price: Rs 770
Suggested entry range: Rs 640–660 for investors with a 6–12 month horizon
Key Risks to Monitor
Despite a strong operational backdrop, ICICI Securities cautions against several downside risks:
Volatility in LME aluminum prices or a steep decline in metal premiums.
Widening scrap spreads, which could depress margins if not offset by recycling gains.
Slower-than-expected ramp-up of Indian downstream capacity.
Persistent geopolitical or regulatory uncertainties impacting export tariffs or energy costs.
Conclusion: Hindalco’s Recovery Narrative Gains Strength
Hindalco Industries’ steady execution across global and domestic businesses reinforces ICICI Securities’ conviction in the stock. While margin compression due to high scrap costs and tariff hurdles remains a concern, management’s proactive capex strategy, diversified product exposure, and focus on cost optimization position the company for consistent long-term returns. With Novelis stabilizing and Indian operations ramping up, Hindalco offers a balanced risk-reward for investors looking to participate in the global metals upcycle.
Target Price: Rs 770 | Recommendation: BUY | Time Horizon: 12 Months
