Key metal stocks, especially aluminium plays, are in focus. The domestic brokerage house, Motilal Oswal Financial Services, has retained its ‘Buy’ rating on Hindalco Industries despite the fire at the Oswego plant of Novelis. They believe that the long-term outlook on the company remains robust on the back of domestic growth and cost effectiveness.
The brokerage house has set a target price of Rs 1,110 per equity share. This implies a potential upside of over 21% from current levels.
Domestic growth to outperform
The company’s management expects domestic demand (across Asia) to remain robust and outpace the modest growth expectation of 2-4% CAGR globally, broadly driven by renewable & electrification, infra spending, packaging, and auto/EV adoption.
Hindalco Industries’ Indian operation has been nearly net debt-free, while its consolidated net debt-to-EBITDA ratio stood at 1.7x as of December 2025, mainly attributed to Novelis Bay Minette expansion.
Cost effectiveness
The impact of the ongoing conflict in the Middle East is largely limited to rising energy (coal) costs. Management noted that 75% of energy is fulfilled via coal linkages and the rest via e-auction; therefore, the rise in coal e-auction prices can increase its energy costs.
Hindalco Industries’ cost mix stands as 40% coal, 35% alumina and 25% others (including Caustic soda and petcoke/CP coke, etc). As a mitigation strategy, Hindalco Industries targets to be 100% captive by FY33 via three captive mines (Chakla – H1 FY27, Bandha – FY27 and Meenakshi – FY29), resulting in $200 per tonne in direct cost savings.
Expansion of value-added products
Management plans to expand value-added product offerings (both copper and aluminium), with an aim of cushioning the margins and achieving higher downstream EBITDA in India over the medium term. Hindalco Industries highlighted that the Aditya FRP (Flat Rolled Products) and battery enclosure facility is currently ramping up. It is also expecting the commissioning of the IGT (Inner Grooved Tubes), battery foil and AC Fin.
Novelis’ fundamentals stay resilient
For Novelis, management indicated that while the temporary disruptions from the Oswego Plant fire have hindered the near-term outlook, the underlying business remains fundamentally strong in the long run, with Bay Minette coming on stream by the second half of the current year of 2026.
The metal firm’s management was confident that 70–80% of the total cash flow impact of $1.3-1.6 billion (inclusive adjusted EBITDA impact of $150-200 million) will be recovered through insurance in a phased manner over FY27-28.
However, muted near-term earnings visibility from Novelis due to the Oswego fire could remain a key overhang on the overall performance.
All in all, Motilal Oswal said that it remains structurally positive on Hindalco Industries, considering the favourable London Metal Exchange (LME), its strategic expansion aligned with a robust domestic outlook, and a strong balance sheet, which provides steady growth visibility and capital efficiency in the long run.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.