Whalesbook
Hindalco Industries, a BSE 100 company, is facing market attention after its wholly-owned subsidiary, Novelis, announced a fourth-quarter loss of $84 million. This contrasts sharply with the $294 million profit earned in the same period last year. The decline was largely due to production disruptions from fires at Novelis's Oswego plant in the U.S. in September and November, which the company estimates led to 73 kilotonnes fewer shipments and a $53 million hit to Adjusted EBITDA.
Brokerage Maintains Bullish Stance
Despite Novelis's operational challenges, Emkay Global Financial Services reiterated its 'Buy' rating for Hindalco. Emkay set a price target of ₹1,100, suggesting about 5% upside from the prior close of ₹1,048.15. The firm expects Novelis's earnings to improve starting in the second quarter of fiscal year 2027. This outlook is supported by anticipated better scrap spreads, normalized tariff impacts, the restart of the Oswego mill, and the new Bay Minette project expected to start in late 2026.
Leverage and Long-Term Outlook
Emkay forecasts Hindalco's leverage to rise temporarily to around 4.5x in the short term, but expects it to decrease to about 4.0x by the end of FY27 and fall further afterward. While Novelis's recent results pose a near-term hurdle, Hindalco's stock has a strong long-term track record, with a 59.29% gain over the past year and a 1104.08% return over the last decade.