Emkay Global Financial Services has issued a BUY Call on Hindalco Industries, upgrading its recommendation from "Reduce." The research house sets a target price of Rs 900, signaling an upside potential of more than 20% from the current levels. The upgrade is underpinned by strengthening aluminum prices, Hindalco's industry-leading cost profile, and emerging positive outlooks for its U.S. subsidiary Novelis. While downside risks exist, the market setup uniquely favors upstream industrial metals, making Hindalco a compelling opportunity for investors seeking resilience and growth.

Strong Market Upgrade: Emkay Signals BUY

Emkay Global's conviction in Hindalco has shifted dramatically, moving from 'Reduce' to 'BUY' with a new target price of Rs 900 (previously Rs 650), reflecting improving sectoral dynamics and company-specific tailwinds.
The recommendation comes after a 12-month period of subdued stock performance, where Hindalco lagged its peers but now stands poised for a rebound.
The driving factor behind this optimistic stance is the company's ability to leverage higher aluminum prices and its globally competitive cost curve, reinforcing its earnings power and valuation prospects.

Aluminum Prices: Macro Tailwinds Driving Earnings

Aluminum markets have transitioned from languish to growth, propelled by supply discipline and a weaker dollar index, setting the stage for solid profitability in 2026-2028.
Emkay projects the 6-month aluminum price target at USD 2,850 a ton with consensus forecasts of USD 2,650–2,750 per ton for FY27-28, translating into higher cash flows for Hindalco.
This price environment should catalyze a new earnings upgrade cycle, further validating the BUY stance.

Cost Leadership: India's Advantage

Hindalco boasts operational superiority, producing aluminum at USD 1,700 per ton—substantially undercutting China's average of USD 2,300 per ton.
This strategic cost edge enables above-normal margins and a sizeable consolidated operating cash flow, estimated at Rs 300 billion per annum—equivalent to 13% of enterprise value.
Such efficiency ensures sufficiency for planned capital allocation, including capacity expansions and green energy investments.

Novelis Turnaround: Margin Recovery in Sight

Hindalco's U.S. subsidiary, Novelis, now faces diminished cost pressures on aluminum scrap, while London Metal Exchange prices trend upward, pointing toward margin normalization.
Recent distortions in scrap spread, induced by Midwest premiums and trade tariffs, are easing. As a result, Novelis margins are forecast to recover to USD 480 per ton by FY28E and surpass USD 500 per ton by FY29E.
Capacity expansion, particularly the Bay Minette recycling and rolling plant (600 kt; USD 4.1bn capex, commissioning in H2CY26) is set to drive low double-digit ROCE and restore profitability.

Comprehensive Project Pipeline Energizes Growth

Hindalco is actively investing across upstream and downstream verticals, targeting both volume expansion and product innovation through major capex cycles until FY29.
Key initiatives include the Aditya alumina greenfield project (850 kt, FY28), smelter expansion, battery foil mills, copper smelters, and several vertical integrations, each calibrated for efficiency and market share growth.
These investments, spread across aluminum, copper, and specialty alumina, ensure sustained operational momentum and future-proof the business.

Valuation: Rerating Potential and Investor Levels

Hindalco trades at 6.4x EV/EBITDA, nearly one standard deviation below its 10-year average, signaling ample scope for valuation rerating as the market recognizes secular improvements.
Emkay applies a blended DCF and peer-multiple methodology to derive a Rs 900 fair value. The expected price return is 20.7%, with dividend yield of 0.7%, aggregating an expected total return of 21.3% as of September 2025.

Key Financial Metrics (FY24–FY28): Outlook Table

Risks and Downside Triggers

Emkay cautions that the principal risks include sudden capital allocation indiscipline across the aluminum sector and regulatory relaxation, particularly potential easing of Russian sanctions, which may pressure the cost curve and trigger oversupply risks.
Higher-than-expected price surges could incentivize a fresh wave of supply, and any adverse movement in trade tariffs or macro volatility could curtail the anticipated upward trajectory.
Execution delays in planned projects and slower-than-forecast recovery in Novelis also remain areas investors should monitor closely.

Investor Levels and Strategic Takeaway

For equity investors seeking exposure to the industrial metals growth cycle, Emkay's Rs 900 target stands as a well-demarcated aspiration level for Hindalco, with intermediate support at Rs 650 and a high watermark at Rs 773 for the 52-week high.
Today, Hindalco's risk-reward profile is skewed favorably upward; prudent portfolio managers can look to accumulate on corrective dips, with clear sight of substantial rerating potential over the coming fiscal years.
As Emkay's report decisively illustrates, Hindalco sits at the nexus of sectoral transformation and operational excellence. The BUY recommendation reflects institutional conviction in sustainable growth, innovative project execution, and judicious capital stewardship.