Hindalco shares gain 2% after beating estimates in Q2 report: Should you buy?

Hindalco shares: Hindalco reported a 123% year-on-year (YoY) rise in standalone net profit, amounting to Rs 1,891 crore.

In Short

• Hindalco shares rose over 2% after strong Q2 results
• Standalone net profit surged 123% YoY to Rs 1,891 crore
• Revenue from operations rose 8% YoY to Rs 22,262 crore

Shares of Hindalco rose by 2.6% on Tuesday, reaching a high of Rs 672.20 on the Bombay Stock Exchange (BSE), following strong financial resulyts for Q2 FY25. The aluminium and copper manufacturing giant reported a 123% year-on-year (YoY) rise in standalone net profit, amounting to Rs 1,891 crore. This figure is an increase from the Rs 847 crore posted in the same quarter last year and exceeded the market estimate of Rs 1,294 crore. Hindalco's revenue from operations also saw an 8% YoY increase, reaching Rs 22,262 crore for the reporting period.

The profit surge was largely driven by strong operational performance in Hindalco’s India business, favourable market conditions, and effective cost control measures. Analysts said that Hindalco’s overall performance reflected resilience in the face of challenging market factors, particularly within its overseas operations.

Hindalco’s Novelis unit, the world’s largest producer of flat-rolled aluminium products and a major contributor to Hindalco’s international business, saw some mixed results in the quarter. Novelis reported revenue of $4.3 billion, marking a 5% YoY increase, mainly due to higher average aluminium prices. However, adjusted EBITDA for Novelis dropped by 5%, standing at $462 million. This decline was attributed to less favourable metal benefits, an unfavourable product mix, and a $25 million impact from a flood at the company’s Sierre facility in Switzerland.

Excluding the flood impact, Novelis’ shipments rose by 4%, with EBITDA per tonne at $502. Although the flood event in Sierre presented a temporary challenge, the segment maintained growth, indicating a stable base for Novelis despite regional disruptions.

SHOULD YOU BUY, SELL, OR HOLD?

Several brokerages have shared their perspectives on Hindalco’s performance and provided recommendations for investors considering the stock.

JP MORGAN

JP Morgan has retained an 'Overweight' rating for Hindalco, with a target price set at Rs 735. The brokerage highlighted the strong Q2 performance across Hindalco’s India operations and noted the absence of any significant negatives in the quarterly report. JP Morgan expects a slight upward revision in the FY25 consensus estimates following this strong quarterly showing, signalling confidence in Hindalco’s ability to sustain its growth trajectory.

INVESTEC

Investec has maintained a 'Buy' rating on Hindalco, with a target price of Rs 860. The brokerage pointed out the operational strength shown in Q2 while also noting that further clarity is needed on capital expenditure plans for future growth. Additionally, Investec acknowledged that Hindalco’s India operations have an advantageous position concerning bauxite lease expirations when compared to local competitors, ensuring steady raw material supply for continued production.

(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)