Hindalco down 2% after Q4 results; analysts expect earnings recovery ahead

Brokerages, however, emphasised that underlying operational performance remained strong, supported by record earnings in the domestic business and a gradual recovery at Novelis

Analysts remain bullish on Hindalco Industries following the Q4 FY26 earnings, even as reported net profit declined due to the impact of the Oswego fire at Novelis, which weighed on the bottom line.    Notably, Hindalco’s net profit declined 51 per cent in Q4FY26 to ₹2,597 crore from ₹5,284 crore in Q4FY25, due to disruptions linked to the Oswego incident at Novelis. However, the company reported its highest-ever consolidated revenue and Ebitda (earnings before interest, tax, depreciation and amortisation) for both the quarter and the full year, driven by strong performance in the India aluminium and copper businesses, along with improving momentum at Novelis. Consolidated Ebitda for the fourth quarter stood at ₹11,197 crore, up 9 per cent year-on-year. 

 

Brokerages, meanwhile, emphasised that underlying operational performance remained strong, supported by record earnings in the domestic business and a gradual recovery at Novelis. On the operating front, analysts highlighted that pricing strength and resilient margins in the India operations helped offset the temporary impact from US operations.

 

In early trade, the stock advanced nearly 1 per cent to touch an intraday high of ₹1,119.8 on the NSE, but later reversed gains. At 11:04 AM, the counter was trading at ₹1,089, down 1.82 per cent from ₹1,109.20 on the NSE.  CHECK Q4 Results Today

Brokerages on Hindalco post Q4 results

Motilal Oswal: Buy | Target price ₹1,280

Motilal Oswal Financial Services (MOFSL) retained its 'Buy' rating on Hindalco with a target price of ₹1,280, noting that the stock continues to trade at 7.5x EV/Ebitda and 1.7x P/B on FY28E estimates.

 

Analysts Alok Deora and Sonu Upadhyay said the company delivered a strong Q4FY26 performance, driven by favourable pricing, a better domestic product mix, and higher by-product realisations. Novelis, they added, reported better-than-expected earnings after adjusting for the Oswego fire impact.

 

“Going forward, the strong earnings outlook for the Indian business remains intact, and Novelis’ volume/Ebitda is expected to recover from 2Q/3QFY27 onwards, with the Oswego facility coming on stream in Jun’26. In addition, with the commissioning of downstream capacity, Indian business margins are expected to expand, offsetting near-term cost inflation,” the analysts noted in their report.

 

They further highlighted that Novelis is expected to see strong incremental volumes from the Bay Minette project, which is likely to be commissioned by 3Q/4QFY27E.

 

The brokerage raised its estimates, increasing revenue by 9/10 per cent, Ebitda by 10/11 per cent, and PAT by 14/12 per cent for FY27/FY28, factoring in a strong domestic outlook driven by elevated commodity prices, cost savings, and a recovery in Novelis earnings.

JM Financial: Buy | Target price ₹1,310

JM Financial also maintained its 'Buy' rating on Hindalco with a target price of ₹1,310, revising earnings estimates upwards by 8.6 per cent and 7.6 per cent for FY27E and FY28E, respectively, citing LME prices sustaining above USD 3.5k/t amid supply constraints.

 

The brokerage said consolidated Q4 adjusted Ebitda came in significantly ahead of its estimate. The beat was driven by a ₹1,200 crore outperformance in Novelis, largely optical in nature due to $577 million of fire-related losses booked below Ebitda, and a $2.5 billion upside in the India copper business supported by elevated sulphuric acid prices. The India aluminium business (including Utkal) was largely in line at ~₹57,000 crore equivalent contribution.

 

The brokerage also noted that India’s cost of production is expected to rise around 5 per cent in Q1FY27 due to furnace oil and coal price increases. For FY27, 29 per cent of aluminium volumes are hedged at $3,013/t, while 14 per cent currency exposure is hedged at ₹90.13/USD. Copper Ebitda is expected to remain steady in Q1FY27 but could moderate to ₹600–700 crore in Q2/Q3FY27 if sulphuric acid prices soften.

 

JM Financial has guided India capex at ₹12,000 crore and Novelis capex at $2.1–2.4 billion, including $350 million for Bay Minette. Net debt is expected to peak at ₹80,000–90,000 crore over the next two years, with leverage remaining below 2.0x.  =============================================== 

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