Motilal Oswal has expressed optimism about Hindalco, suggesting investors buy the stock with a target price of Rs 800. According to their recent report, Hindalco (HNDL) plans substantial capital expenditure of approximately USD 6.9 billion over the next three to five years. This investment aims to expand capacities across various products and locations, including the USA and India. Key projects include enhancing capacities in alumina, aluminum recycling, and extrusion.
For FY25, Hindalco anticipates a capex of about INR 60 billion in India, focusing on expanding mines, alumina refining, and smelting facilities. The company’s upcoming 600kt facility in Bay Minette, USA, is poised to cater to growing demand for beverage cans and auto-grade aluminum sheets in North America. Novelis, a subsidiary of Hindalco, has shown improved margins recently, expected to continue into FY25.
Outlook:
Motilal Oswal reaffirms its buy rating on Hindalco with a target price based on Sum-of-the-Parts valuation methodology (SOTP) at Rs 800 per share. Currently, the stock trades at 6.5x FY26E EV/EBITDA and 1.5x FY26E P/B ratios.
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