Kotak Securities has double upgraded Hindalco Industries Ltd. to 'Buy' from 'Reduce', citing improving earnings visibility and attractive risk-reward following recent market correction. According to reports from CNBC TV18, the brokerage marginally raised its price target to ₹1,120 per share from ₹1,100, suggesting a potential upside of 17% from current levels. The upgrade comes as multiple earnings drivers are beginning to align for the aluminum and copper producer. On Thursday, shares of Hindalco opened at ₹972.40 against a previous close of ₹955.80 on the NSE, with the stock up 8% in one month and outperforming the 0.26% rise in the Nifty 50 benchmark.
Kotak estimates that Hindalco's net debt will peak in FY27 as capital expenditure on the Bay Minette project nears completion. As reported by CNBC TV18, the brokerage believes leverage has already peaked at 1.8x in FY26 and expects strong free cash flow generation from FY28 to support rapid deleveraging. Following the recent correction, the stock is trading at an attractive 5.5x FY28 estimated EV/EBITDA, adjusted for capital work-in-progress, making the risk-reward favorable. Kotak Securities emphasized that despite Hindalco's ongoing and extensive capital expenditure projects, the company's balance sheet remains exceptionally healthy with robust free cash flow generation capability.
The brokerage highlighted a strong growth pipeline for Hindalco's India business, with the company expanding capacity across copper, alumina and aluminium. According to CNBC TV18, this includes an additional 0.3 mtpa copper smelter, 0.85 mtpa alumina refinery and 0.37 mtpa aluminium smelter. Kotak expects upcoming coal mines to eliminate Hindalco's dependence on external coal over the next three to five years, reducing production costs by $150-200 per tonne. The company's Indian division is anticipated to formally join the broader growth track beginning in FY2028, with the company steadily laying groundwork through capacity additions across its metals portfolio.
Kotak remains constructive on the medium-term aluminium outlook, forecasting a global supply deficit of 0.9 million tonnes in CY26 and 0.1 million tonnes each in CY27 and CY28. As reported by CNBC TV18, the brokerage expects LME aluminium prices to average $3,250 per tonne in FY27 and $3,000 per tonne in FY28. The brokerage provided a nuanced view of global aluminum dynamics, noting that while the absolute "peak deficit" in the aluminum market is receding, the overall supply-demand environment remains tight. This continued market tightness is likely to support steady pricing and stable realizations for primary producers like Hindalco, providing a solid floor for earnings.
According to Bloomberg data cited by CNBC TV18, 14 of the 33 analysts covering Hindalco have a 'Buy' rating, 12 recommend 'Hold', while seven have a 'Sell' call on the stock. Shares of Hindalco ended 2.13% lower at ₹953.50 on Wednesday and have gained about 7% so far this year. The stock is expected to be in focus on Thursday, July 16, following the brokerage's upgrade announcement. Kotak Securities notes that Hindalco is effectively poised for a structural comeback as the company's recent phase of operational disruptions is now firmly in the rearview mirror, with normalization of existing operations and successful rollout of key growth projects expected to drive near-term and medium-term growth.
