Hindalco Industries Recommended as a Hold, Target Price Set at Rs 1126: Prabhudas Lilladher

Hindalco Industries Downgraded to 'Hold' by Prabhudas Lilladher

In a recent research report, Prabhudas Lilladher has downgraded its rating for Hindalco Industries (HNDL) to 'Hold' from 'Accumulate' due to several factors affecting the company's performance.

The report highlights that Hindalco Industries delivered largely in-line fourth-quarter consolidated operating performance, driven by continued strong performance in India and sequential improvement in Novelis. However, the company still faces challenges such as the recovery from the Oswego fire incident, higher tariffs, higher leverage, and the potential risk of higher scrap pricing. As a result, Prabhudas Lilladher maintains a 6.5x multiple on Novelis, which is still recovering from these issues.

The report also notes that captive mining is still a few quarters away, and production start from Chakla has been delayed to Q4FY27 from H1FY27. Additionally, the ally hedging and overall inflationary environment for fuel and raw materials are expected to limit India's FY27 EBITDA.

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Key Changes in Outlook

Prabhudas Lilladher has revised its target price (TP) for Hindalco Industries to INR 1,126, valuing the company's India business at a higher multiple of 7x EV of March 28, 2028 EBITDA (earlier 6x). This change is based on expectations of stronger EBITDA on higher LME prices, which are benefiting from the disruption in Middle East smelters.

The revised target price and rating change reflect Prabhudas Lilladher's updated outlook for Hindalco Industries, taking into account the company's current performance and future prospects.

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