Hindalco Q1 Results Review - Weak Volumes, LME Hedging Impacts The Quarter: Prabhudas Lilladher

Prabhudas Lilladher Report

We factor in lower aluminium prices of $2,413/$2,454 for FY25E/26E from earlier assumption of $2,469/$2,537 and cut consolidated Ebitda by 4%/5%.

Hindalco Industries Ltd.'s Q1 FY25 delivered weak operating performance due to weak standalone aluminium business and muted volumes. Volumes were muted, with -1%/1% YoY growth for aluminium/copper businesses.

India aluminium business (excluding Utkal) performance was lower than our estimate due to lower blended realisation impacted by hedging. Management guided for lower operating costs at Indian ops aided by lower fuel and input prices in the near term.

We expect Novelis volume growth to remain soft in the next two quarters due to external disruptions and seasonality. Management indicated improving demand scenario for beverage can volumes and stable demand from auto and aerospace segment.

Specialty volumes are likely to remain muted in Europe in the near term.

We expect Novelis to deliver ~4% volume growth over the next two years and Ebitda margins to remain in the range of 525-550/tonne.

At current market price, the stock is trading at enterprise value of 5.6 times/five times FY25E/FY26E Ebitda.

Retain ‘Buy’ rating with revised target price of Rs 749 (earlier Rs 796), valuing Novelis at 6.5 times and standalone ops at five times EV of Mar’26E Ebitda.

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