Brokerages have largely maintained a positive stance on Hindalco Industries Ltd, with Elara Securities and Axis Securities reiterating their 'Buy' ratings, albeit with lowered target prices. In contrast, Nuvama Institutional Equities upgraded the stock to 'Buy' and raised its target price.
Elara Securities Details Hindalco's Q2 FY27 Performance
Elara Securities reiterated its 'Buy' rating on Hindalco, but adjusted its sum-of-the-parts (SOTP)-based target price to Rs 1,227 from Rs 1,270. This revision factors in lower London Metal Exchange (LME) aluminium price assumptions for future periods.
The brokerage noted that Hindalco reported a consolidated EBITDA of approximately Rs 12,800 crore for Q2 FY27, exceeding both Elara's and consensus expectations. This strong performance was bolstered by $39 million in business interruption insurance proceeds related to the 2025 Oswego fire and a stronger-than-expected showing from the company's copper business.
Looking ahead, Elara anticipates improved profitability for Novelis, driven by a recovery in volumes at the Oswego plant and ongoing structural cost savings. Domestically, Hindalco has over Rs 50,000 crore in expansion projects currently underway, with an additional Rs 50,000 crore of growth opportunities under evaluation, signaling robust long-term demand visibility. The brokerage also highlighted that structural cost advantages, the commissioning of a new coal mine, and continuous capacity additions are expected to further support earnings growth.
Record EBITDA for Copper Business
Hindalco's copper business achieved an all-time high EBITDA of Rs 1,670 crore in Q2 FY27, marking an impressive 164 percent year-on-year increase. This significantly surpassed Elara's guidance of around Rs 900 crore, primarily due to higher realizations from by-products like sulphuric acid and certain one-off gains.
Despite the strong copper performance, Elara lowered its overall EBITDA estimates for Hindalco by around 2 percent for FY27 and 3 percent for both FY28 and FY29, attributing this to the revised, lower LME aluminium price forecasts. Elara continues to value Novelis at 5.5 times and Hindalco's other businesses at 6 times.
Other Brokerage Actions and Key Risks
Axis Securities also maintained its 'Buy' rating on Hindalco, though it cut its target price to Rs 1,060 per share from Rs 1,155 previously. In contrast, Nuvama Institutional Equities upgraded the stock to 'Buy' and raised its target price to Rs 1,184 from Rs 1,108 earlier.
Global brokerages Nomura and UBS have also maintained positive stances, recommending 'Buy' ratings with target prices of Rs 1,100 and Rs 1,325, respectively.
Elara identified several key risks to its investment call, including a potential slowdown in demand across crucial end-user industries, weak aluminium prices, and adverse currency movements.