The brokerage marginally raised its price target to ₹1,120 per share from ₹1,100. The revised target suggests a potential upside of 17% from current levels.
Kotak said multiple earnings drivers are beginning to align for Hindalco. It expects a recovery in Novelis following recent operational disruptions, supported by the recommissioning of the Oswego plant, improved scrap spreads in the US, and the ramp-up of the Bay Minette facility from FY28 onwards.
The brokerage also pointed to a strong growth pipeline for Hindalco’s India business. The company is expanding capacity across copper, alumina and aluminium, including 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 brokerage also 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.
It expects LME aluminium prices to average $3,250 per tonne in FY27 and $3,000 per tonne in FY28.
Kotak estimates Hindalco’s net debt will peak in FY27 as capital expenditure on the Bay Minette project nears completion.
It 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 brokerage said the stock is trading at an attractive 5.5x FY28 estimated EV/EBITDA, adjusted for capital work-in-progress, making the risk-reward favourable.
According to Bloomberg data, 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. The stock has gained about 7% so far this year.
