Hindalco’s share price has seen a sharp 4% slide after its Q3 results. Weakness at Novelis following the Oswego Novelis is a key overhang for the stock.
The domestic aluminium business remained firm, but higher working capital, capex outflows and Novelis-related impact drove leverage higher.
According to reports by Motilal Oswal, JM Financial, Nuvama Research and Axis Securities, Novelis is a key overhang.
Motilal Oswal on Hindalco: ‘Buy’
Motilal Oswal Financial Services has maintained a ‘Buy’ rating on Hindalco with a Target Price of Rs 1,110, implying 22.6% upside from Rs 905.75.
The brokerage said consolidated net sales came in at Rs 66,500 crore, rising 14% year-on-year and remaining flat sequentially. Consolidated EBITDA stood at Rs 7,975 crore, broadly in line with its estimate. It said adjusted PAT stood at Rs 3,900 crore, down 20% quarter-on-quarter, largely led by weak earnings from the Novelis business. It also noted that the company recorded an exceptional item related to repair, clean-up and restoration expenses at the Oswego plant following the fire incident.
The brokerage said consolidated net debt increased to Rs 59,500 crore as of December 2025 from Rs 41,800 crore in December 2024. It attributed the increase largely to Novelis’ negative free cash flow due to capex, working capital and fire-related impact.
“In-line performance; Novelis to remain overhang on earnings,” Motilal Oswal said in its report.
It added that earnings growth going forward will be supported by favourable pricing in India, but overall business outlook has weakened following the Oswego fire and cost escalation in the Bay Minette project.
JM Financial on Hindalco: ‘Buy’
JM Financial has maintained a ‘Buy’ rating on Hindalco with a Target Price Rs 1,120 implying 23.7% upside from Rs 905.75.
It noted that EBITDA declined about 11% quarter-on-quarter due to weak performance at Novelis following the Oswego fire. India aluminium EBITDA including Utkal Alumina stood at about Rs 5,060 crore, up 6% sequentially driven by stronger London Metal Exchange aluminium prices. Copper EBITDA was Rs 595 crore, down 6% quarter-on-quarter.
JM Financial said net debt increased significantly to Rs 59,400 crore in Q3FY26 from Rs 41,400 crore in Q2FY26. It attributed this to an increase in net debt at Novelis by about $400 million, a $750 million equity infusion by the parent entity, and higher working capital in the copper segment of about Rs 4,000 crore.
“India ops in-line; Oswego fire drag down earnings,” JM Financial said in its report.
The brokerage added that Novelis net debt is currently about $6.2 billion and could rise temporarily to the high $8 billion range with capex spend on Bay Minette and delayed insurance inflows. It maintained that strong LME trends and full ownership of key mines support long-term earnings trajectory.
Nuvama Research on Hindalco: ‘Hold’
Nuvama Research has maintained a ‘Hold’ rating on Hindalco with a Target Price Rs 913 implying 0.8% upside from Rs 905.75.
The brokerage said Hindalco India, including Utkal Alumina, reported lower-than-expected Q3FY26 adjusted EBITDA of Rs 5,170 crore against its estimate of Rs 5,490 crore. Aluminium EBITDA per tonne stood at $1,563 per tonne, flat quarter-on-quarter despite LME aluminium prices rising by $211 per tonne sequentially. It said the impact of adverse geographical mix and hedging losses offset higher LME prices.
Nuvama said consolidated net debt surged 44% quarter-on-quarter to Rs 59,460 crore. It attributed the increase to higher working capital in the copper segment in India and Novelis-related factors, including restatement of debt amid rupee depreciation, higher working capital due to rising aluminium prices, capex and restoration expenses after the Oswego fire. It also noted that Hindalco paid $750 million as equity to Novelis during Q3FY26 and will pay an additional $200 million in Q4FY26.
“Debt exploding; price supports earnings,” Nuvama said.
The brokerage said it has cut EBITDA estimates by 9%, 6% and 5% for FY26, FY27 and FY28 respectively, factoring in lower profits at Indian operations and muted Novelis performance. It said it awaits lower prices to re-enter the stock.
Axis Securities on Hindalco: ‘Hold’
Axis Securities has assigned a ‘Hold’ rating on Hindalco with a Target Price Rs 1,050 implying 15.9% upside from Rs 905.75.
The brokerage said consolidated revenue stood at Rs 66,521 crore, largely in line with its estimate, while EBITDA came in at Rs 7,975 crore, down 11% quarter-on-quarter due to Novelis impact. Adjusted PAT stood at Rs 4,659 crore, up 23% year-on-year but down 5% sequentially.
Axis Securities said aluminium upstream EBITDA per tonne grew 6% year-on-year and 3% sequentially to $1,572 per tonne, aided by higher LME aluminium prices and stable shipments. It said copper EBITDA moderated to Rs 595 crore due to lower treatment and refining charges and adverse concentrate mix.
The brokerage said consolidated net debt rose to Rs 59,461 crore, up 44% quarter-on-quarter and 42% year-on-year. It attributed this to Novelis free cash flow outflow of $1.7 billion in 9MFY26, Bay Minette capex acceleration, and higher working capital due to rising aluminium prices.
It added that the Oswego fire is expected to have an EBITDA impact of $150–200 million and a free cash flow impact of $1.3–1.6 billion before insurance recovery, though 70–80% of the cash impact is expected to be recoverable over time.
Conclusion
All four brokerages agree that Hindalco’s domestic aluminium business remains strong, supported by higher LME prices and stable volumes.
However, Novelis performance and rising leverage remain key concerns.
Motilal Oswal and JM Financial continue to see more than 20% upside from current levels, while Axis Securities remains moderately positive and Nuvama Research stays cautious with limited upside.