Hindalco: Downgrade Despite Potential 34% Upside
Hindalco Shares See Mixed Signals from Analysts
Shares of Hindalco Industries Ltd. are experiencing a mixed bag of signals from analysts, with one firm downgrading its rating while others remain optimistic about the stock’s future. Despite a recent downgrade, bullish projections still see the potential for a significant upside.
Investec Downgrades, But Remains Positive
Investec, a brokerage firm, has downgraded its rating on Hindalco to ‘hold’ from ‘buy’ and lowered its target price to ₹730 per share. This represents a 9.6% increase from Hindalco’s previous closing price of ₹666 per share. Investec cited headwinds for both Hindalco’s India and Novelis operations, including a lack of volume growth in the next two fiscal years and challenges related to tariffs and raw material costs.
CLSA and JPMorgan Maintain Optimism
On the other hand, CLSA and JPMorgan remain bullish on Hindalco. CLSA maintains its ‘outperform’ rating with a revised price target of ₹850 per share, suggesting a potential upside of 28%. While acknowledging potential profitability dips in the first half of the current fiscal year due to rising costs and lower metal prices, CLSA emphasizes Hindalco’s robust long-term prospects, driven by high captive coal sourcing, strong downstream volume and alumina sales.
JPMorgan, too, maintains its ‘overweight’ recommendation and raised its price target to ₹720 per share. They highlight Hindalco’s India business as a key strength, citing its positive performance in EBITDA expansion, debt reduction, and organic growth. JPMorgan expects Hindalco’s Aluminum EBITDA per tonne to decline sequentially due to easing pricing tailwinds, but anticipates flat costs and volume growth from downstream projects to support EBITDA expansion this year.
Other Brokerage Views
DAM Capital and Nuvama have also reiterated their ‘buy’ ratings on Hindalco, with price targets of ₹895 and ₹776 per share, respectively. DAM Capital points to Hindalco’s attractive valuation at 5.2 times its FY27 enterprise value (EV) / EBITDA, deeming the risk-reward favorable.
Overall Sentiment
Out of the 30 analysts covering Hindalco, 26 have ‘buy’ ratings, one has a ‘hold’ rating, and three have ‘sell’ ratings. Despite the recent downgrade, the overall sentiment remains positive, with many analysts predicting significant upside potential for the stock.
Share Performance
Hindalco shares dipped 1.2% to ₹654.6 apiece on Wednesday, May 21. However, the stock has still gained 11.3% year-to-date.
