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Hindalco - Healthy performance from Indian operations offset muted show from Novelis

ICICIdirect Research 14 Feb 2025 DISCLAIMER

Company's consolidated EBITDA for the quarter stood at ₹7,601 crore (up 26% YoY) with corresponding EBITDA margins at 13%, (up 156 bps YoY). EBITDA/tonne for Novelis was at $406/tonne, (down 19% YoY) impacted by higher aluminium scrap price. However, this decline has been offset by healthy EBITDA from Indian operation, which stood at ~₹5,149 crore (up 60% YoY).

Going forward, the management expects Novelis Q4FY25 performance to better than Q3FY25, largely driven by seasonally higher volume, favourable product mix and will also benefit from new contract pricing for its product slate.

Additionally, the management expects the ongoing tariff is short term noise and will not have structural impact.

On a long-term perspective, we maintain a positive view on Hindalco, supported by strong demand for Aluminium and copper metal, strategic capacity expansion at Novelis and Hindalco and controlled leverage on B/S with Debt to Equity at ~0.5.

Our last rating on the company was BUY with a target price ₹ 800 i.e. 7.3x EV/EBITDA on FY26E.

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