Hindalco Industries Share Price Target: Should You Buy, Sell or Hold This Aditya Birla Stock?

Shares of Hindalco Industries are in focus after Kotak Institutional Equities upgraded the stock to 'Buy' from 'Reduce', pointing to a recovery at Novelis, improving earnings visibility and an attractive risk-reward after the recent correction. Kotak Securities' Private Client Group, which summarised the note, has set a fair value of ₹1,120 against the current market price of ₹956 an upside of nearly 17% over the next year.

Why Kotak Turned Positive on Hindalco

Three things are driving the upgrade: Novelis is recovering from its recent operational troubles, Hindalco's India business is finally showing a clearer growth path, and the medium-term aluminium outlook still looks supportive.

The Novelis turnaround should come as production normalises after the disruptions that hit output. On the domestic side, Hindalco's aluminium business is entering its next growth phase as new capacity comes online and operations stabilise. Kotak expects this business to start contributing more meaningfully from FY28, once ongoing projects are commissioned. It also remains upbeat on aluminium fundamentals over the medium term - a tailwind for the company's upstream operations.

Capacity Expansion to Drive Long-Term Growth

Hindalco's expansion pipeline is central to the upgrade. The company plans to add roughly 0.37 million tonnes of aluminium capacity and 0.3 million tonnes of copper smelting capacity by FY29. Kotak estimates these projects could deliver a return on capital employed of 13-15%, with free cash flow turning positive from FY28 as the bulk of the spending winds down. Despite the scale of investment, the balance sheet is expected to stay manageable, helped by improving operating cash flows.

Debt to Peak in FY27, Says Report

Leverage is the one thing Kotak wants investors to watch. Net debt jumped 83% year-on-year to ₹64,800 crore in FY26, largely on the back of spending on the Bay Minette project. That number should peak in FY27 as the project nears completion Kotak reckons the leverage ratio itself already peaked at around 1.8x in FY26. From FY28, stronger free cash flow is expected to bring debt down at a decent pace.

Hindalco Share Price Target: Buy, Sell or Hold?

Kotak's call is Buy, with a 12-month fair value of ₹1,120. The thesis rests on Novelis recovering, the India business picking up pace, new aluminium and copper capacity coming through, and free cash flow improving from FY28. Leverage remains a near-term watch point given the capex cycle, but Kotak sees debt close to its peak and expects deleveraging to kick in from FY28. At the current price of ₹956, that implies an upside of close to 17% over the next year.

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