Why Macquarie Downgraded Hindalco Despite Upbeat Sector Outlook
About Hindalco and the Downgrade
Hindalco Industries, one of India’s largest aluminum and copper producers, has been downgraded by Macquarie from ‘Outperform’ to ‘Neutral’ with a revised target price of ₹876. The brokerage cited recent strong price performance as a reason for limited near-term upside, even though it remains constructive on the company’s global downstream and domestic expansion plans.
Macquarie noted that Hindalco’s integrated value chain and rising contribution from Novelis’ recycling and downstream segments remain strategic positives. However, the stock’s substantial rally has already priced in much of the expected improvement in profitability and demand recovery.
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Financial Snapshot and Valuation Metrics
| Metric | Value | Notes |
|---|---|---|
| CMP | ₹845 | As of latest session |
| Target Price (Macquarie) | ₹876 | Revised from ₹709 |
| P/E (FY26E) | 13.4x | Slightly below sector avg |
| EV/EBITDA (FY26E) | 6.8x | At par with peers |
Peer Comparison
| Company | CMP (₹) | P/E (FY26E) | Rating |
|---|---|---|---|
| Hindalco | 845 | 13.4x | Neutral |
| NALCO | 162 | 14.1x | Buy |
| Vedanta | 281 | 12.8x | Accumulate |
SWOT Analysis
| Strengths | Strong integration from bauxite mining to rolled products; robust export presence via Novelis |
| Weaknesses | High power costs and exposure to global aluminum price cycles |
| Opportunities | Growth in downstream and renewable-linked demand; value-added aluminum products |
| Threats | Volatility in LME prices; global slowdown risks |
Investment Verdict
Given the recent rally and fair valuations, Hindalco appears fairly valued in the short term. Investors may hold existing positions and look for opportunities to accumulate on dips for a medium to long-term horizon (12–24 months). Upside potential remains modest until fresh earnings upgrades materialize.
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Investor Takeaway
Indian-Share-Tips.com Nifty Expert Gulshan Khera, CFP®, who is also a SEBI Registered Investment Adviser, believes Hindalco’s structural story remains intact though near-term upside seems capped. Investors can wait for better entry points during price corrections.
Discover more insights at Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.
Related Queries on Metal Stocks
- What is the future outlook for Hindalco after Macquarie’s downgrade?
- How do aluminum prices affect Hindalco’s profitability?
- Which are the best long-term metal stocks in India?
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
