Hindalco Shares Fall 2% Post Novelis' 36% Decline In Profit; Buy Or Sell This Aditya Birla Stock? Target Price

Hindalco shares remained under pressure on Tuesday, a day after the Aditya Birla Group's flagship metal company's arm, Novelis, reported weak June quarter earnings. The US-based subsidiary reported a 36% year-on-year decline in its net profit.

Hindalco shares were down 2% during the pre-opening session. The company scrip was trading 2% lower at Rs 658 per share on BSE during the pre-market opening session. The stock had opened at 658 apiece. The stock was trading 0.57% lower at Rs 667.95 per share at 9:20 am on BSE.

Hindalco Share Price Recommendation

Profitability margin and revenue generation by Novelis were mostly in line with the estimate by Motilal Oswal brokerage. The company's shipment volume stood at 963kt against an estimated 975 kt, which was 1% higher annually. The shipment volume was flat on a sequential basis, primarily led by higher beverage packaging shipments, partially offset by lower automotive and speciality shipments.

"Revenue stood at USD4.7b (+13% YoY and +3% QoQ) against our estimate of USD4.4b.Adjusted EBITDA stood at USD416m (vs. our est. of USD434m), declining 17% YoY and 12% QoQ," noted Motilal Oswal in its report. The brokerage maintained a 'Buy' rating for the stock, in its latest report.

The management is working to mitigate the impact of 50% US tariff imposed on imported aluminium in the US. The company is seeing a firm demand for beverage cans and would offset part of lower demand of auto and specialities.

"However, high aluminium prices in the US pose downside risk to overall demand if aluminium import tariffs continue in US. Though management guides adjusted EBITDA bottoming out in Q1FY26, any major recovery is not visible until Q3FY26," Nuvama added in its report.

Hindalco Target Price

Brokerage Nuvama also retained a buy rating for the stock. "Management guides for net tariff impact of ~USD60mn/quarter (assuming 50% tariff on aluminium imports in the US). Despite that, with likely improvement in scrap spread and reducing production cost, management guided for EBITDA to have bottomed out in Q1FY26. We shall adjust our numbers with Hindalco's Q1 earnings. Retain 'BUY' with an unchanged TP of INR776 based on 6.2x FY27E EV/EBITDA," added Nuvama in its report.

Novelis Q1 Result

Hindalco's US-based subsidiary Novelis reported a 36% year-on-year decline in its net income (attributable to shareholders) to $96 million for the first quarter of fiscal year 2025-26. Restructuring charges, surge in aluminium scrap prices, unfavourable product mix, and negative impact of United States tariff were some of the key reasons that impacted Novelis's June quarter earnings.

The company's special items, net income fell 43% to $116 million, with its adjusted EBITDA declining by 17% to $416 million. However, the adjusted EBITDA per tonne fell by 18% to $432.

The US-based company's net sales for the June quarter surged by 13% to $4.7 billion, supported by higher average aluminium prices and a marginal surge in total rolled products shipments to 963 kilotonnes.

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