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Investing.com - JPMorgan has downgraded Hindalco Industries Limited (NSE:HNDL) from Overweight to Neutral while maintaining a price target of INR810.00.
The downgrade follows a 20% rally in Hindalco’s stock price since the end of June, compared to a flat Nifty index. JPMorgan indicates the current share price appears to be pricing in London Metal Exchange (LME) aluminum prices of $2,850, versus the firm’s forecast of approximately $2,650 through the fourth quarter of 2026.
A key factor in the downgrade is Novelis, Hindalco’s subsidiary, which has issued new guidance projecting a negative adjusted EBITDA impact of $100-150 million in the second half due to a fire incident. Novelis has also increased its capital expenditure guidance for the Bay Minette project from $4.1 billion to $5 billion, citing labor inflation, tariff impacts, and increased project complexity.
JPMorgan notes that Novelis expects its net debt to EBITDA ratio to increase to 4x over the next few quarters, compared to 3.5x in the second quarter and 2.5x last year. The subsidiary anticipates parent Hindalco will need to carry out an equity infusion of approximately $750 million in the near term.
These negative factors overshadow Novelis’s headline earnings beat and its quarter-over-quarter growth in EBITDA per ton despite disruptions at its Oswego plant, according to JPMorgan’s analysis.
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