Hindalco Novelis Q1 Results Review: Ebitda/Tonne May Sustain Over $525: ICICI Securities

ICICI Securities Report

Hindalco Industries Ltd.'s wholly owned subsidiary Novelis’ Q1 FY25 performance was in line with our estimates. Key points:

1. Shipments at 951kt (up 8% YoY) were slightly ahead of our estimate of 947kt;

2. beverage can market is back to normalcy with Latin American volume rising 29% YoY;

3. focus on recycling continues;

4. scrap market is tight but inflationary pressures have eased;

5. FY25 capex is likely at the lower end of $1.8-2.1 billion guidance; and

6. flooding in Sierre may have (volume related) Ebitda impact of $30 million – net of insurance.

Going ahead, we expect shipments to stay robust and Ebitda/tonne (adjusted for Sierre flooding) may sustain at $530-545/tonne. Taking cognisance of Novelis’ performance, we maintain Buy on Hindalco with an unchanged target price of Rs 830 based on 7.0 times FY26E Ebitda.

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