Hindalco Industries Ltd. is a flagship company of the Aditya Birla Group. Hindalco Industries produces aluminum and copper items, including aluminum packaging materials like cans and foil. Their copper product range includes cathodes and rods.
Hindalco Industries has three major segments for revenue generation –
- Aluminum – 16%
- Copper – 19%
- Novelis (Subsidiary) – 65%
Novelis, part of Hindalco Industries Limited, makes sheets for cars and beverage cans. Hindalco generates 76% of its revenues from abroad and 24% from the domestic market.
Now you have got an understanding of Hindalco Industries overview. Let’s discuss Hindalco’s share price target by 2025.
Hindalco Share Price Target 2025
At present, Hindalco Industries share price is trading around Rs 490-500. The metal stock has given above 20% return in 1 year.
Experts and analysts are predicting a share price of Rs 650 by 2025 and as go through the article, you’ll learn important factors to understand the expert’s views.
Fundamental Analysis of Hindalco
Hindalco’s EPS has rapidly increased by an impressive 38% per year over the last three years making it an attractive investment choice but you should analyze other factors as well that we’ll discuss below.
#1. Revenue growth
Revenue growth is a fundamental indicator of a company’s health and Hindalco has shown consistent revenue growth over the past 5 years.
The metal giant’s revenues have been increased by 70% from 2019 to 2023. But you have to check whether the company is generating profits or not despite the increase in revenues. That we’ll discuss in the next section.
#2. Profit growth
Hindalco’s net profit for the year experienced a decline of 28.9% compared to the previous year. The net profit margins also dropped from 7.3% in FY22 to 4.5% in FY23.
The reason for this fall in profit is due to an increase in raw materials and manufacturing costs.
Return on Equity (ROE)- The ROE for Hindalco decreased to 10.6% during FY23, down from 18.1% in FY22, which is a red flag.
Return on Capital Employed (ROCE)- In FY23, the ROCE for Hindalco declined to 11.5%, compared to 18.0% in FY22. ROCE assesses a company’s ability to generate profits from both shareholder capital and debt capital employed in the company.
Return on Assets (ROA)- Hindalco’s ROA also saw a decrease, falling to 6.1% during FY23 from 8.1% in FY22. ROA evaluates how efficiently a company utilizes its assets to generate earnings.
#3. Peer Comparison
Hindalco’s major rivals are National Aluminium Company Ltd (NACL) and Vedant Ltd. Out of them National Aluminum has outperformed Hindalco Industries whereas Vedanta’s share price fell drastically in one year.
You can compare the major ratios of Hindalco Industries and its competitors as shown below –
|Stock Name||Market Cap (in Crores)||PE Ratio||ROE||ROCE|
|Hindalco Industries||1,11,586||13.2||11.7 %||11.3 %|
|Vedanta||87,837||11.8||20.4 %||23.8 %|
#4. Investor’s Shareholding Pattern
You can also analyze the investor’s shareholding pattern to understand if big players like FIIs and DIIs in the market are showing trust in the stock or not.
An increase in shareholding shows a positive sign and vice versa.
Shareholding Pattern Analysis (June 2022 to June 2023)
Foreign Institutional Investors (FIIs) increased their investments in Hindalco from 24.76% to 26.25%. FIIs’ increasing stake suggests that foreign investors see potential in Hindalco.
Domestic Institutional Investors (DIIs) followed a more fluctuating pattern. They initially increased their investments from 21.52% in June 2022 to 26.87% by December 2022, showing confidence in the stock. However, by March 2023, their shareholding decreased slightly to 26.08%.
Although they initially showed confidence in Hindalco, the subsequent decrease in their shareholding might indicate some reservations or portfolio adjustments.
The government of India has also increased investment in the stock from 0.01% to 0.22% within a year which could be a positive sign.
#5. Interest Coverage Ratio, CFO/PAT, and Other Factors
I. Interest Coverage Ratio (ICR)
The ICR tells us how good a company is at paying back its debt interest.
In Hindalco’s case, the ICR stands at 4.89. This means that for every rupee of interest expense, Hindalco generates nearly 4.89 rupees in operating profit (earnings before interest and taxes).
A higher ICR indicates a healthier financial position and reduces the risk of default on debt payments. It means that Hindalco can comfortably manage its debt payments, which is a positive sign.
II. CFO/PAT Ratio
The CFO (Cash Flow from Operations) to PAT (Profit After Tax) ratio is 1.85.
The CFO/PAT ratio guides you on how effectively Hindalco can convert its profits on books into actual cash flow. A ratio less than 1 could indicate that a significant portion of the profit is tied up in non-cash items, such as depreciation. An increasing ratio over time suggests improved cash generation relative to earnings.
III. Price to Cash Flow (P/CF)
This metric compares the market price of a company’s stock to its cash flow per share. A higher P/CF ratio may indicate that the stock is overvalued, whereas a lower ratio suggests it may be undervalued.
The Price to Cash Flow ratio for Hindalco is 5.85, which shows Hindalco’s share price is undervalued.
IV. Debt-to-Equity Ratio
Hindalco’s debt-to-equity ratio is 0.64.
This ratio shows how much of a company’s money comes from borrowing (like loans) compared to what comes from its owners (shareholders). A lower ratio signifies lower financial leverage and reduced risk, while a higher ratio may suggest higher risk due to significant debt obligations.
A debt-to-equity ratio below 1 is considered good by stock analysts.
Technical Analysis of Hindalco
#1. Trend Analysis
You can see that Hindalco Industries Limited has recently shifted towards a long-term upward trend since April 2023.
Currently, the stock is facing a challenge at the Rs. 500 mark, If it breaks the resistance at Rs 503 (its previous high), then chances are high that the bullish trend will continue.
#2. Moving averages
14 out of 15 moving averages are giving a strong buy signal. The stock price is trading above “50-day” at 458 and “200-day” at 439 shows a bullish signal.
9 out of 11 oscillators are giving a natural signal, and 2 oscillators are showing a sell signal.
Hindalco’s RSI value is around 66, which may indicate a neutral signal. Oscillators like the relative Strength Index (RSI) help identify overbought or oversold conditions.
RSI value above 70 shows an overbought condition, while values below 30 may suggest oversold conditions.
Collectively, when analyzing both oscillators together, it shows a price drop in the near future, and then the bullish trend may continue.
Hindalco’s Business Prospects
Hindalco Industries Limited has recently made a shareholder’s agreement and a power purchase deal with Seven Renewable Power, with the aim of acquiring a 26 percent stake in SRPPL at a cost of Rs 32.5 lakh. The goal here is to establish a power facility that would deliver 100 MW of renewable energy to power their smelter in Odisha.
The Aditya Birla Group company is ready to invest Rs 2,000 crore in a copper and e-waste recycling facility in India.
Additionally, they’ve also earmarked another Rs 2,000 crore for the Vande Bharat trains project in collaboration with the Indian Railways.
Major Risks of Investing in Hindalco
- Raw Material Price Fluctuations – Hindalco, similar to other metal companies, is vulnerable to fluctuations in raw material prices. These can impact revenue and profitability.
- Regulatory Challenges – Government policies and regulations, both in India and globally, can affect Hindalco’s operations and bottom line. Keep an eye on regulatory changes.
- Market Competition – Hindalco faces competition from both domestic and international players. The intensity of competition can influence market share and pricing power.
The Hindalco Industries shares have given 16% returns in the last 5 years and its stock has given consistent returns over the past 5 years.
But if you look at the past 2 years’ performance, the stock had picked momentum around December 2021 and crossed Rs 630 per share price, but after April 2022 till June 2022, it kept on falling till June 2022, and after that, the price had risen again but still trading at January 2022 price range.
As per the experts’ opinion, HIndalco’s share price target can be around 650 by 2025 based on all the air around.
However, you should do your thorough research and seek professional expert advice before making any investment decisions.
You can also read about other stocks’ target prices –
- Suzlon Share Price Target
- Tata Motors Share Price Target
- Tata Power Share Price Target
- Adani Power Shares Target Price
Hindalco Industries Limited primarily operates in the production of aluminum and copper. Additionally, they manufacture aluminum products for packaging, such as cans and foil.
Hindalco has signed a shareholder’s agreement and a power purchase deal with Seven Renewable Power to acquire a 26 percent stake in SRPPL. This initiative aims to establish a captive power facility supplying 100 MW of renewable energy to their smelter in Odisha.
Hindalco plans to invest Rs 2,000 crore in a copper and e-waste recycling facility in India. They have also allocated Rs 2,000 crore for the Vande Bharat trains project in collaboration with the Indian Railways.
As part of the Aditya Birla Group, Hindalco Industries benefits from a strong network, financial support, and access to diverse resources, enhancing its potential for growth and innovation.
You can regularly check Hindalco’s official website and financial reports. Additionally, staying informed through reliable financial news sources and market analysis can provide insights into the company’s activities and performance.
Potential investors should assess factors like the company’s financial performance, industry trends, and recent strategic moves.
Hindalco Industries appears to be proactive in addressing challenges by investing in renewable energy, recycling, and other innovative projects. Their diversified approach aims to mitigate industry-related risks.
You can find Hindalco’s financial reports on their official website or through reliable financial news sources.
Candlestick patterns can be analyzed on different time frames, but it’s common to use daily or weekly charts for longer-term investing.
Diversification is key to managing risk in your investment portfolio. Avoid putting all your savings into a single stock. Consider consulting with a financial advisor for a personalized strategy.