🧵 At a Glance
Hindalco is more than just aluminium and copper. With Novelis churning global dollars and domestic operations delivering steady cash flow, the Aditya Birla flagship is posting record profits. At a P/E of just 9, are we ignoring a stealth multibagger in plain sight?
🏭 1. Aluminium, Copper, and World Domination
Hindalco = Aluminium + Copper + Novelis
- Novelis (59% of FY25 rev)
- World’s largest recycler of aluminium
- Serves: Beverage cans, autos, aerospace
- FY25 shipments: 2,800 KT (↑3% YoY)
- India Biz (Al + Cu)
- Extrusions, foils, conductors
- Power infra, renewable cables, packaging
- Expanding into high-margin downstream projects
And now, it’s also shopping abroad 🛒
→ Acquired AluChem (USA) for $125M
→ Expanding in specialty alumina — the “organic chemistry” of metals.
💰 2. Hindalco Is Printing Profits
FY25 was metal magic:
| Metric | FY25 |
|---|---|
| Revenue | ₹2.38 lakh Cr |
| Net Profit | ₹16,002 Cr |
| OPM | 13% |
| ROE | 14.5% |
| ROCE | 15.2% |
| EPS | ₹71.20 |
Compare this to FY20:
- Profit then? ₹3,767 Cr
- Now? 4x higher
- Sales then? ₹1.18 lakh Cr
- Now? 2x higher
💥 5-year profit CAGR = 34%
💥 TTM profit growth = 63%
🧾 3. Valuation: Dirt Cheap for a Global Leader
Let’s get EduReal:
- FY25 EPS: ₹71.2
- Fair P/E range:
- Base: 11x (commodity + global ops)
- Bull: 14x (steady earnings + growth + downstream play)
🎯 Fair Value Range = ₹783 to ₹997
CMP = ₹673 → Undervalued by 15–35%
This isn’t fantasy — it’s math.
Even if aluminium prices cool, Novelis is steady. And with a 9.09 P/E, you’re buying a global monopoly at PSU valuation. 🤯
🪙 4. Dividend: Still Meh
- Dividend per share (FY25): ₹5
- Yield: ~0.52%
- Payout Ratio: ~7%
Hindalco prefers reinvesting over rewarding. Long-term investors may appreciate that, but yield seekers? Look elsewhere.
🧮 5. Balance Sheet: Capex Done Right
- Borrowings: ₹63,929 Cr → manageable
- CWIP: ₹27,023 Cr (up 82% YoY) → downstream capex is happening
- Operating Cash Flow FY25: ₹24,410 Cr
- FCF negative (due to ₹24,739 Cr investing) — but justified
This isn’t frivolous spending — it’s building tomorrow’s Novelis, today.
📈 6. Price vs Profit: Disconnect?
| Year | Net Profit (₹ Cr) | Stock Price (₹) |
|---|---|---|
| FY21 | ₹3,483 | ₹360 |
| FY22 | ₹13,730 | ₹625 |
| FY25 | ₹16,002 | ₹673 |
EPS up 4x in 4 years.
Stock? Up less than 2x.
Valuation? Now back to FY21 levels.
🎯 Either the market is sleeping…
Or Hindalco is India’s most boring 2x return waiting to happen.
🔍 7. Risks to Watch
🟥 Commodity cycle reversal (aluminium, copper prices fall)
🟥 Novelis margin pressure (US/Europe slowdown)
🟥 Downstream integration delays (AluChem ROI yet to show)
🟥 Dividend yield still underwhelming
But hey — these risks exist in every metal stock.
What makes Hindalco different?
✅ Global footprint
✅ Novelis monopoly
✅ Capex-backed growth
✅ Rock-bottom valuation
🧠 TL;DR — EduInvesting Verdict
If Hindalco were a cricketer:
It’s Rahul Dravid with muscles. Steady, global, underappreciated — but never out.
📈 Growth: 🔥
💸 Value: ✅
📊 Dividend: 😐
💥 Optionality: AluChem, EV aluminium, Novelis IPO someday?
CMP ₹673
🎯 FV Range: ₹783 – ₹997
Verdict: Buy the metal. Not the noise.
🧠 Tags:
Hindalco stock analysis, Novelis business model, aluminium stock India, copper industry, Aditya Birla Group stocks, fair value Hindalco, Hindalco FY25 results, EduInvesting stock coverage
✍️ Written by Prashant | 📅 26 June 2025
