Hindalco Industries, among FIIs' favourites, gets a fresh price target from Kotak; here's why
The metal sector stock, which is among FIIs' favourites, received a 'buy' call against the earlier 'reduce' call.
- Jul 16, 2026,
- Updated Jul 16, 2026 10:07 AM IST
Shares of Hindalco Industries are in focus today after aluminium firm of the Aditya Birla Group received an upgrade from brokerage firm Kotak Institutional Equities.The metal stock, which is among FIIs favourites, received a 'buy' call against the earlier 'reduce' call for the stock. FIIs held 33% stake in the stock in the June 2026 quarter.
The brokerage cited improving earnings visibility and an attractive risk-reward following the recent correction. The stock is down 7.23% in the last three months. However, the stock has gained 44.35% in a year and risen 115.50% in three years.
The brokerage hiked its price target to Rs 1,120 per share from the earlier Rs 1,100. The fresh target implies an upside of 17% from the current levels.
Kotak Equities believes several earnings catalysts are coming together for Hindalco Industries, strengthening its long-term investment case. The brokerage expects Novelis to stage a recovery after recent operational disruptions, helped by the restart of the Oswego plant, improving scrap spreads in the US market and the gradual ramp-up of the Bay Minette recycling and rolling facility from FY28.
The brokerage also highlighted Hindalco's robust domestic expansion pipeline. The company is undertaking capacity additions across its copper, alumina and aluminium businesses, including a 0.3 million tonnes per annum (mtpa) copper smelter, a 0.85 mtpa alumina refinery and a 0.37 mtpa aluminium smelter. These projects are expected to strengthen its integrated metals portfolio and support future earnings growth.
The commissioning of captive coal mines over the next three to five years is likely to eliminate Hindalco's reliance on third-party coal supplies. This transition is expected to lower aluminium production costs by an estimated $150-$200 per tonne, enhancing profitability, according to Kotak.
The brokerage also remains optimistic about the medium-term outlook for aluminium prices, projecting a global supply deficit of around 0.9 million tonnes in calendar year 2026, followed by deficits of approximately 0.1 million tonnes in both CY27 and CY28. It forecasts average London Metal Exchange (LME) aluminium prices of $3,250 per tonne in FY27 and $3,000 per tonne in FY28.
On the balance sheet, Kotak expects Hindalco's net debt to reach its highest level in FY27 as spending on the Bay Minette project approaches completion. However, it believes the company's leverage ratio has already peaked at around 1.8x in FY26 and anticipates a sharp improvement in free cash flow generation from FY28 onwards, paving the way for rapid deleveraging.
Following the recent decline in the share price, Kotak believes Hindalco is trading at an attractive valuation of about 5.5 times FY28 estimated EV/EBITDA, after adjusting for capital work-in-progress. The brokerage said the current valuation offers an appealing risk-reward profile for long-term investors.
Meanwhile, according to Bloomberg data, 14 of the 33 analysts have a 'Buy' rating, 12 recommend 'Hold', while seven have a 'Sell' call on the Hindalco stock.
Shares of Hindalco were trading nearly 1% higher at Rs 963.20 in early deals today. Market cap of the metal firm climbed to Rs 2.16 lakh crore.
Shares of Hindalco Industries are in focus today after aluminium firm of the Aditya Birla Group received an upgrade from brokerage firm Kotak Institutional Equities.The metal stock, which is among FIIs favourites, received a 'buy' call against the earlier 'reduce' call for the stock. FIIs held 33% stake in the stock in the June 2026 quarter.
The brokerage cited improving earnings visibility and an attractive risk-reward following the recent correction. The stock is down 7.23% in the last three months. However, the stock has gained 44.35% in a year and risen 115.50% in three years.
The brokerage hiked its price target to Rs 1,120 per share from the earlier Rs 1,100. The fresh target implies an upside of 17% from the current levels.
Kotak Equities believes several earnings catalysts are coming together for Hindalco Industries, strengthening its long-term investment case. The brokerage expects Novelis to stage a recovery after recent operational disruptions, helped by the restart of the Oswego plant, improving scrap spreads in the US market and the gradual ramp-up of the Bay Minette recycling and rolling facility from FY28.
The brokerage also highlighted Hindalco's robust domestic expansion pipeline. The company is undertaking capacity additions across its copper, alumina and aluminium businesses, including a 0.3 million tonnes per annum (mtpa) copper smelter, a 0.85 mtpa alumina refinery and a 0.37 mtpa aluminium smelter. These projects are expected to strengthen its integrated metals portfolio and support future earnings growth.
The commissioning of captive coal mines over the next three to five years is likely to eliminate Hindalco's reliance on third-party coal supplies. This transition is expected to lower aluminium production costs by an estimated $150-$200 per tonne, enhancing profitability, according to Kotak.
The brokerage also remains optimistic about the medium-term outlook for aluminium prices, projecting a global supply deficit of around 0.9 million tonnes in calendar year 2026, followed by deficits of approximately 0.1 million tonnes in both CY27 and CY28. It forecasts average London Metal Exchange (LME) aluminium prices of $3,250 per tonne in FY27 and $3,000 per tonne in FY28.
On the balance sheet, Kotak expects Hindalco's net debt to reach its highest level in FY27 as spending on the Bay Minette project approaches completion. However, it believes the company's leverage ratio has already peaked at around 1.8x in FY26 and anticipates a sharp improvement in free cash flow generation from FY28 onwards, paving the way for rapid deleveraging.
Following the recent decline in the share price, Kotak believes Hindalco is trading at an attractive valuation of about 5.5 times FY28 estimated EV/EBITDA, after adjusting for capital work-in-progress. The brokerage said the current valuation offers an appealing risk-reward profile for long-term investors.
Meanwhile, according to Bloomberg data, 14 of the 33 analysts have a 'Buy' rating, 12 recommend 'Hold', while seven have a 'Sell' call on the Hindalco stock.
Shares of Hindalco were trading nearly 1% higher at Rs 963.20 in early deals today. Market cap of the metal firm climbed to Rs 2.16 lakh crore.