Buy Hindalco Industries: target of Rs 1204: ICICI Securities

Moneycontrol • 2 days ago

Original source

Key Investment Pillars

  • Strong copper profitability: Copper emerged as a key earnings driver, with EBITDA surging 163.9% YoY/ 82.2% QoQ to INR 16.7bn, supported by stronger realisations and improved by-product economics.
  • Aluminium resilience: Aluminium upstream EBITDA stood at INR 59bn, up 69% YoY, supported by better LME-linked realisations.
  • Novelis recovery: Novelis' earnings may see an uptick with Oswego's normalisation and Bay Minette's commercial shipments kicking off in Q1FY28.
  • Expansion projects: The company plans to spend INR 520bn to expand smelting, refining, FRP, and copper recycling, strengthening integration and value-added mix.

Thesis Validation Checklist

  • Copper profitability: Monitor copper EBITDA/te and realisations to gauge the sustainability of copper profitability.
  • Aluminium prices: Track LME aluminium prices and regional premiums to assess the impact on aluminium upstream profitability.
  • Novelis' earnings: Watch for signs of recovery in Novelis' earnings, driven by Oswego's normalisation and Bay Minette's ramp-up.
  • Debt levels: Monitor net debt and net debt/EBITDA to ensure that the company's leverage remains manageable.