Hindalco plans capex of $10 bn for upstream and downstream expansion

Hindalco Industries, the metals flagship company of the Aditya Birla Group, plans to spend around $10 billion on capital expenditure over the next five years, including that at its U.S.-based subsidiary Novelis Inc. The capital expenditure program includes $5 billion for India business and equally for aluminum recycling arm Novelis.

At its Investor Day 2025, Hindalco on April 1 unveiled plans to double its upstream business and quadruple the downstream business in India by FY30. The company also reinstated its net debt to EBITDA guidance for the consolidated entity to 2x and for Novelis 2.5x.

Meanwhile, Hindalco Industries shares declined as much as 1.6% to ₹652.50, while the market capitalisation slipped to ₹1.47 lakh crore.  

Brokerages view on Hindalco expansion plan

Based on the management’s growth strategy, analysts at Motilal Oswal and JM Financial have given ‘Buy’ call on Hindalco shares, while Emkay reiterated ‘Sell’ rating with a higher target price.

Motilal Oswal has maintained ‘Buy’ rating with a target price of ₹770 per share, citing that ongoing expansion is set to position Hindalco as the global leader. “Novelis has already secured long-term contracts from marquee customers for Bay Minette, ensuring future revenue visibility. With a larger scale and operational efficiency, margins are expected to expand over the medium to long term,” it said in a report.

According to the brokerage house, delays in capex to put pressure on cash flow, while rise in scrap prices to impact margins. On U.S. government’s proposed tariffs, the agency said that it would lead to demand and supply disruptions.

Another domestic brokerage JM Financial has given ‘Buy’ call on the stock, saying that Hindalco continues to be buoyant given resilient performance by India aluminium operations and enhanced coal security. India business continues to work on key growth projects of smelter expansion and alumina refinery, besides expanding in flat rolled products (FRP).

The agency opines that Indian aluminum operations will benefit on account of higher captive coal in the mix with mines getting operational in the medium term; volume growth led by growth projects in aluminium operations. The smelter expansion of 300 kilo-tonnes per annum (ktpa) in copper division is likely to drive volumes and margins going forward.

On the other hand, Emkay has reiterated its ‘Sell’ rating on Hindalco, albeit with an upgraded target price of ₹600. “Our SELL rating was predicated on concerns around scrap cost and Novelis’s margins, negative Cu TC/RCs, and valuation excesses that built in the lead up to the Novelis IPO last year which was later called off,” it said.

The brokerage said that the market appears to have priced out excess valuation optimism as well. “Therefore, we raise our EV/EBITDA multiples to 6x from 5-5.5x, as we think reduced multiples are no longer warranted; hence, we raise our blended TP to ₹600 by 9%. Nevertheless, we think positive levers are still out of sight, for us to take a constructive view.”

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