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Investing.com - Kotak has downgraded Hindalco Industries (NSE:HALC) Limited (NSE:HNDL) from Buy to Reduce and lowered its price target to INR705.00 from INR735.00, citing concerns over tariff impacts on its Novelis subsidiary.
The downgrade follows Novelis’ first-quarter fiscal year 2026 adjusted EBITDA results, which came in below estimates due to lower margins and reduced shipments, according to Kotak’s analysis.
Kotak notes that management expects a larger impact from tariffs on Novelis in the second quarter of fiscal year 2026 compared to the first quarter, particularly with the increase in Section 232 tariffs in the United States to 50% from the previous 25%.
While Hindalco is implementing various mitigation measures and anticipates margin pressure to ease in the second half of fiscal year 2026, Kotak believes the risk of demand destruction from elevated tariffs is being underestimated.
The research firm has trimmed its earnings estimates for Hindalco based on expectations of lower margins at Novelis, resulting in the revised fair value and downgrade from Buy to Reduce.
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