Hindalco shares get a downgrade, but bullish projections still see up to 34% upside

Analysts who have coverage on shares of Hindalco Industries Ltd. have mixed views on the stock, but the bullish side sees a potential upside of up to 34% on the stock from Tuesday’s closing levels.

Brokerage firm Investec has downgraded its rating on Hindalco to “hold” from “buy” and has cut its target price to ₹730 apiece from the previous ₹765 per share. This is still an upside of 9.6% from the stock’s previous closing price of ₹666 per share.

The brokerage listed the following factors for its downgrade on the stock:

• Bump up in capex
• No volume tailwinds in FY26 and FY27 for both of Hindalco’s India and Novelis operations
• Headwinds on Novelis with regards to tariffs
• London Metal Exchange (LME)-scrap spreads
• Initiatives on raw material cost levers to see tangible gains only by the financial year 2028.

Investec also trimmed its earnings before interest, taxes, depreciation and amortisation (EBITDA) estimates on Hindalco for FY26 and FY27 by 6% and 4%, respectively. It also expects the alumina and aluminium permia to taper going into FY26 and FY27.

On the flip side, CLSA has maintained its “outperform” rating on Hindalco with a revised price target of ₹850 apiece, which implies a potential upside of 28% from Tuesday’s closing levels.

While CLSA expects Hindalco’s profitability to taper down in the first half of the current financial year due to rise in costs and lower metal prices, its medium-term outlook remains robust, with high captive coal sourcing, robust downstream volume and alumina sales.

For Novelis, CLSA expects the expansion benefits to start reflecting only from FY28, which will coincide with a pick-up in domestic expansion projects. As a result, Hindalco’s net debt may peak in FY27, according to the brokerage.

JPMorgan has also maintained its “overweight” recommendation on Hindalco and raised its price target to ₹720.

The brokerage said the India business is ticking the right boxes around EBITDA expansion, debt reduction and organic growth, which is largely managing to offset the headwinds from Novelis.

The brokerage expects Hindalco’s Aluminium EBITDA per tonne to be lower on a sequential basis as pricing tailwinds ease, but costs should remain flat and volumes from downstream projects will support EBITDA expansion this financial year. Additionally, its net debt-to-EBITDA level should also comfort investors, according to JPMorgan.

Meanwhile, DAM Capital and Nuvama have both reiterated their respective “buy” ratings on the stock, with price targets of ₹895 and ₹776 per share, indicating an upside potential of 34.4% and 16.5% from its previous closing price, respectively.

DAM Capital said the Hindalco stock is trading at an attractive 5.2 times its FY27 enterprise value (EV) / EBITDA. It said the risk reward is favourable.

Of the 30 analysts that have coverage on the stock, 26 have a “buy” rating, one has a “hold” rating and three have a “sell” rating.

Hindalco shares declined 1.2% to 654.6 apiece on Wednesday, May 21. The stock has gained 11.3% this year, so far.

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