Hindalco Shares Slip on Mixed Brokerage Calls; Rs 8,000 Cr FY26 Capex Planned, Novelis IPO in Pipeline

Hindalco Industries shares turned crimson today after a few brokerage firms highlighted their cautious stance on the stock. The stock was trading 0.7% lower on the NSE at 9:48 AM. Investec downgraded its rating on Hindalco to ‘hold’ from ‘buy’ and cut its target price by 5% to Rs 730 apiece. However, this still implies an upside of over 10% from the stock's previous closing price on the NSE. The brokerage firm cited tariff-related headwinds for Novelis, among other reasons for the downgrade.

CLSA, on the other hand, maintained its ‘outperform’ stance on Hindalco but expects the company’s profitability to taper down in the first half of the current financial year due to increase in costs and lower metal prices. At the beginning of the pre-open session today, the stock was trading 5% higher.

The company’s Managing Director Satish Pai underlined the plans of spending approximately Rs 8,000 crore in the ongoing financial year. For its material US-based subsidiary Novelis, this will be a peak capex year with around $2.4bn, mainly for the Bay Minette project, Business Standard reported, citing Pai as saying.

Hindalco also has investments lined up for upstream projects such as alumina refinery, copper recycling, aluminium smelter expansion and copper smelter and the total investment plan for the same will likely be around Rs 45,000 crore over the next few years, Pai said.

The flagship company of the Aditya Birla group plans to commission 160-kilotonne expanded capacity in FY26 in Odisha, along with completing copper inner grooved tube plant project in Baroda and the aluminium air-conditioning refill plant project in Taloja. Beyond these plans, Pai also highlighted that the metal major will look to list Novelis after the subsidiary’s existing project gets commissioned and manages to achieve a consistent performance of $500 per tonne.

Hindalco’s consolidated net profit for the March quarter zoomed over 66% on year to Rs 5,284 crore. This sharp surge in earnings for the quarter under review came on the back of a 16% growth in the consolidated revenue. US-based Novelis, which accounts for over 60% of the total revenue, saw an over 17% on year growth in revenue for the period. However, EBITDA per tonne for Novelis fell 9% year-on-year.

Motilal Oswal expects Hindalco to post a healthy consolidated performance in FY26 and FY27, mainly due to strong domestic operations. The brokerage reiterated its ‘buy’ call on the stock as it increased its EBITDA estimates for FY26 and FY27 by 3% and 2%, respectively. Motilal Oswal has Rs 790 as target price of the stock.