Hindalco rebound ahead? Analysts upgrade to 'Buy' after 1-year stagnation

After a flat performance over the past 12 months (up just 3.85%), analysts see Hindalco stock set for a rebound, supported by a combination of commodity dynamics and company-specific factors.

Domestic brokerage Emkay Institutional Equities has upgraded Hindalco Industries to ‘Buy’ from ‘Reduce’, raising its target price to ₹900 from ₹650, signaling renewed optimism in the aluminium major. 

 

After a flat performance over the past 12 months (up just 3.85 per cent), analysts see the stock set for a rebound, supported by a combination of commodity dynamics and company-specific factors. 

 

Meanwhile, on the bourses at 11:00 AM, Hindalco share price was trading flat with a positive bias at ₹746.25. In comparison, BSE Sensex was trading 0.45 per cent lower at 81,736.63 levels.

 

According to analysts, a key driver is the expected strength in aluminium prices, which should benefit Hindalco’s India business. The company’s industry-leading cost curve, with production costs around $1,700 per tonne versus the global average of $2,300 per tonne in China, gives it a clear competitive advantage. 

 

This cost leadership, combined with higher aluminium prices, analysts believe is expected to translate into strong cash flow generation, with consolidated operating cash flow estimated at ₹30,000 crore per annum, roughly 13 per cent of its enterprise value (EV). This also provides ample room for planned capital allocation and strategic investments.  Track Stock Market Live Updates 

 

Hindalco’s international arm, Novelis, is also showing signs of recovery, analysts said. Emkay noted that profitability may have already bottomed out, with margins projected to normalise to around $480 per tonne by FY28E and exceed $500 per tonne by FY29E, particularly after the Bay Minette project ramps up fully. Despite tariff-related distortions in scrap spreads, easing used beverage cans (UBC) scrap costs and rising LME prices are expected to offset negative impacts.

 

From a market perspective, Emkay analysts argue that after the “commodity supercycle” sunset around 2012, this may be an optimal time to own industrial metals. Supply restraint combined with a weak US dollar creates a favourable macro tailwind. 

 

Hindalco, relative to global peers, is well-positioned to benefit from these improving dynamics, with firm aluminium prices likely providing duration visibility to earnings and triggering a potential valuation re-rating, analysts said.

 

Hence, the brokerage raised its short-term aluminium target to $2,850 per tonne from $2,700 per tonne, reflecting expected deficits in 2026, and increased its FY27E/28E average price forecasts to $2,650-2,750 per tonne. Hindalco’s Ebitda is expected to rise by 3.1-3.5 per cent in FY27E/28E. 

 

However, analysts at Emkay caution that risks remain, including industry-level capital indiscipline if prices rise too sharply and the potential impact of easing Russian sanctions on cost curves.