Prabhudas Lilladher has maintained its 'Accumulate' rating on Hindalco Industries while revising its target price upward to Rs762. The comprehensive review reveals how Hindalco's robust domestic operations offset persisting weakness in Novelis, its global subsidiary. The brokerage highlights pivotal changes in production, margin improvement, and cost dynamics, offering nuanced insight for traders and long-term investors. Key financial targets, operational milestones, and segment performances underscore Hindalco's resilience in a turbulent global landscape marked by tariffs and volatile commodity prices.

Strong India Growth Offsets Global Softness

India’s Aluminum and Copper Segments Shine Amidst International Challenges Hindalco’s Indian aluminum business showcased remarkable resilience with lower cost curves, benefiting from higher coal linkages and a more favorable product mix. The company’s cost reduction strategy—particularly leveraged by its captive coal mines—is set to decrease coal costs by up to 30% once fully operational. Copper operations, though facing weak TcRc, continue to deliver a guided quarterly EBITDA run rate of Rs6bn.
Commercial Sales and Upstream Volume Targets
Hindalco’s downstream expansion, notably in Aditya FRP, began in June 2025 and is expected to hit a full-year volume of 70kt. They’re moving decisively up the value chain, venturing into advanced products, including battery enclosures for EVs, which bolsters margins and enhances competitiveness.

Novelis Battles Tariffs, Adopts Mitigation Measures

Tariff Shock, Strategic Countermoves Novelis, Hindalco’s overseas arm, faced EBITDA attrition due to doubled Section 232 duties on annual imports from South Korea and South America, resulting in a recurrent negative quarterly impact of USD60m. Pragmatically, management initiated mitigation steps—passing tariffs through to buyers, increasing U.S. manufacturing, and aggressive cost take-outs. The effects should materialize more visibly by Q4 FY26, restoring momentum to the international business.
Segment Trends: Beverage Packaging Outperforms
While global macroeconomic uncertainty curbed demand across most flat rolled products, beverage cans—contributing 60% to volumes—delivered an impressive 8% YoY growth. Automotive and specialty shipments lagged. EBITDA per tonne at Novelis descended to USD432, a 18% YoY drop, due to scrap price challenges and adverse product mix.

Financials: Revenue, Margins, Valuation Multiples

Operating Metrics and Profit Highlights For FY26, consolidated sales are estimated at Rs2,562bn, up 7.4% YoY, with EBITDA projected at Rs322bn and margins at 12.6%. Margins declined from FY25’s impressive 13.8% due to global headwinds despite domestic gains. Net profit for FY26 stands at Rs162bn, with EPS forecasted at Rs72.8; this is a notable 10.7% upgrade over prior estimates.

Shareholder Value & Trading Guidance

Revised Target Price, Market Positioning With Hindalco now trading at an EV/EBITDA of 5.6x FY26E and 5.2x FY27E, valuation remains reasonable. Prabhudas Lilladher values Novelis at 6.5x and standalone operations at 5.5x EV/EBITDA for March 2027 estimates, supporting a revised price target of Rs762 per share—a firm uptick from the earlier Rs738.
Capital Structure and Dividend Outlook
As of Q1FY26, Hindalco reported total cash of Rs186bn against Rs70bn of long-term debt. Consolidated net debt stands at Rs342bn, bringing net debt-to-EBITDA ratio to a healthy 1.02x. Dividend per share is projected at Rs5.5 for FY26, yielding 0.8%, with further growth foreseen.

Capex Plans: Growth and Sustainability

Capex Cycle Intensifies, Expansion Strategies Unveiled Hindalco set a capex target of Rs75–80bn for FY26 and expects peak investment of Rs150bn in FY27. This underscores their commitment to sustainable vertical integration and scaling of both aluminum and copper businesses. New copper scrap plants and refinery expansions are on track, aiming for margin expansion and circular economy gains.

Key Operating Metrics and Financials

Investor Takeaways: Actionable Levels, Recommendations

Key Stock Levels for Hindalco - Current Market Price (CMP): Rs667 - Target Price (TP): Rs762 - 52-Week High/Low: Rs773 / Rs546 - Accumulate Range: 5%-15% upside from CMP - BUY Threshold: >15% upside from CMP - Hold Range: +5% to -5% from CMP
Trading Strategy
Investors are advised by Prabhudas Lilladher to maintain 'Accumulate' positions in Hindalco at current levels, with target price set at Rs762, supported by healthy India's demand, margin upturns, and strategic mitigation in overseas ops. Downside risks are mitigated by cost controls and upcoming production boosts, suggesting ongoing value in holding for further gains.