Hindalco Industries — BUY

 Hindalco Industries — CMP ₹1,052.90 Hindalco Industries

View: 🟢 BUY / HOLD ON DIPS

Hindalco has received a strong fundamental trigger: Q1 FY27 consolidated PAT reached a record ₹7,013 crore, up 75% YoY, with revenue up 32%. The improvement was supported by higher aluminium prices, strong India operations and recovery at Novelis.

📊 Trading setup Parameter View CMP ₹1,052.90 Trend 🟢 Bullish Action BUY Entry zone ₹1,040–₹1,060 Breakout confirmation Above ₹1,075 Target 1 ₹1,100 Target 2 ₹1,150 Target 3 ₹1,200 Stop Loss ₹1,010 Probability 72% Potential upside to ₹1,150 ~9.2% Potential upside to ₹1,200 ~14.0% Timeframe 1–15 days 📈 Technical view The technical setup has improved considerably. Recent market data showed Hindalco breaking to a 20-day high on strong volume and holding above important moving averages.

Support: ₹1,030–₹1,010 Major support: ₹980–₹1,000 Resistance: ₹1,075 Next resistance: ₹1,100–₹1,150

Price-action strategy:

Above ₹1,075 → momentum can accelerate toward ₹1,100 → ₹1,150

Above ₹1,150 → ₹1,200 becomes achievable

Below ₹1,010 → short-term bullish setup weakens

Below ₹980 → avoid fresh buying

I would not chase a sharp gap-up after the strong Q1 result. Buying around ₹1,040–₹1,060 gives a better risk/reward.

📈 EPS & Future Growth FY26 consolidated EPS was ₹60.31, compared with ₹72.05 in FY25. The reported FY26 EPS was depressed by the Novelis/Oswego disruption and exceptional items.

The latest Q1 FY27 result is much stronger: Hindalco reported record quarterly profit of ₹7,013 crore, helped by higher aluminium prices and stronger Novelis performance.

EPS scenario Year EPS view Growth FY26 actual ₹60.31 — FY27E ₹75–₹85 ~25–41% FY28E ₹90–₹105 ~18–24% FY29E ₹100–₹115 ~10–15% These are scenario estimates, not company guidance. Metals earnings are cyclical, so aluminium/copper prices can cause substantial EPS swings.

The major structural catalyst is Novelis' recovery and the Bay Minette project, while Hindalco is also expanding its India aluminium, copper and downstream businesses. The company reported FY26 consolidated EBITDA of ₹38,097 crore and India-business EBITDA of ₹22,671 crore.

💰 PE Ratio & Fair Price At ₹1,052.90:

Against FY26 EPS ₹60.31 → P/E ≈ 17.5×

Against FY27E EPS of ₹80 → forward P/E ≈ 13.2×

Against FY28E EPS of ₹97 → forward P/E ≈ 10.9×

For a cyclical metals company, I would use roughly 12–15× normalized forward EPS rather than applying an excessive multiple.

Using FY28E EPS around ₹90–₹105:

12×: ₹1,080–₹1,260

14×: ₹1,260–₹1,470

15×: ₹1,350–₹1,575

🎯 Fundamental fair value ₹1,250–₹1,400

Bull case: ₹1,450–₹1,550 if aluminium prices remain strong and Novelis execution continues improving.

There is also institutional support for a higher valuation: JPMorgan previously assigned an Overweight rating with a ₹1,125 target, based partly on its positive aluminium-price outlook.

💵 Dividend Hindalco recommended a ₹5/share dividend for FY26, unchanged from the previous year.

At ₹1,052.90:

Dividend yield ≈ 0.48%

So Hindalco is primarily a capital appreciation / cyclical earnings-growth story, not a dividend-yield stock.

🟢 FINAL HINDALCO CALL CMP: ₹1,052.90 BUY: ₹1,040–₹1,060 Breakout BUY: Above ₹1,075 Target 1: ₹1,100 Target 2: ₹1,150 Target 3: ₹1,200 Stop Loss: ₹1,010 Probability: 72% Fair Value: ₹1,250–₹1,400 Bull Case: ₹1,450–₹1,550 FY26 EPS: ₹60.31 FY27E EPS: ~₹75–₹85 FY28E EPS: ~₹90–₹105 FY26 Dividend: ₹5/share Short-term view: 🟢 BUY

⭐ My preferred trade ₹1,050 BUY → ₹1,100 first target → ₹1,150 second target → ₹1,200 positional target, with ₹1,010 SL.

At ₹1,052.90, the risk/reward is attractive provided ₹1,010 holds. The biggest risk is that Hindalco's earnings are highly sensitive to aluminium/copper prices and Novelis execution, so I would avoid using an overly aggressive stop-loss or averaging without confirmation. *Shreeji Finance & Investment*