Hindalco Industries’ Q1FY26 performance, led by its wholly-owned US subsidiary Novelis, has triggered a range of mixed reactions from brokerages, with opinions split between buy, hold, and reduce calls. The quarterly numbers reflected weaker-than-expected margins and shipment growth, alongside escalating tariff headwinds in the US market.
Novelis posted Q1FY26 net sales of $4.7 billion, up 13% year-on-year, with total flat rolled product (FRP) shipments rising just 1% YoY to 963kt. Adjusted EBITDA fell 17% YoY to $416 million, while EBITDA per tonne dropped 18% to $432 — well below last year’s $525/t. The miss was driven by elevated scrap prices, an unfavourable product mix, and net negative tariff impacts. Tariffs under the US Section 232 framework hit Q1 earnings by $28 million, and management now guides for a $60 million hit in Q2 as the rate has been doubled to 50% from 25%.
Kotak Institutional Equities downgraded the stock to Reduce from Add and cut the target price to ₹705, citing underestimated risks of demand destruction from elevated tariffs and limited upside potential. The brokerage believes margin pressures will ease only in the second half of FY26, but the near-term risk-reward remains unfavourable.
Citi maintained a Buy rating with a target price of ₹800, noting that while Q1 EBITDA at $416 million was slightly below estimates, management does not expect Q2 to be materially worse. The brokerage remains positive on the long-term recovery, supported by stable scrap prices and improved product pricing.
Jefferies retained a Hold with a ₹690 target, flagging that net debt is now at a 19-quarter high and that Q2 tariff impacts will be more severe. However, it expects benefits from cost-saving and tariff-mitigation measures to start flowing through in the coming quarters.
CLSA kept an Outperform rating with a target of ₹850, stating that absolute EBITDA appears to have bottomed out (excluding seasonal fluctuations) and raising its cost savings guidance to $100 million from $75 million earlier.
Nuvama also reiterated a Buy with a target price of ₹776, expecting EBITDA to improve from Q1 levels as scrap spreads widen and production costs fall, despite the higher tariff burden.
With the stock currently trading at ₹672, the street is clearly divided. Bulls are betting on cost efficiencies and a second-half recovery, while bears point to near-term tariff pain, weak profitability, and demand risks.
Disclaimer: The above views are those of the brokerages cited. Investors should consult a certified financial advisor before making investment decisions.
