HINDALCO - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:15 pm

Fundamental Rating: 3.7

📊 Core Financials:

- Quarterly PAT at ₹2,266 Cr vs ₹1,862 Cr previously → strong growth momentum.

- ROCE at 12.9% and ROE at 8.98% → moderate efficiency compared to peers.

- Debt-to-equity ratio at 0.18 → manageable leverage.

- Cash flows supported by earnings, though dividend yield is modest at 0.58%.

💹 Valuation Indicators:

- Current P/E: 26.8 vs Industry P/E: 20.6 → slightly overvalued.

- P/B ratio: ~2.6 (₹854 / ₹326) → reasonable.

- PEG ratio: 11.1 → indicates stretched valuation relative to growth.

- Intrinsic value appears lower than CMP, suggesting premium pricing.

🏢 Business Model & Competitive Advantage:

- Hindalco is a global leader in aluminium and copper manufacturing, with strong presence in downstream products.

- Competitive advantage lies in integrated operations, global footprint, and cost efficiencies.

- Market cap of ₹1,91,913 Cr reflects scale and leadership in metals sector.

📈 Entry Zone & Long-Term Guidance:

- CMP ₹854 is above DMA 50 (₹804) and DMA 200 (₹730), showing bullish trend.

- RSI at 65.7 indicates near overbought levels.

- Suggested entry zone: ₹780–₹820.

- Long-term holding recommended for exposure to metals sector, but valuation risk persists.

Positive

• Strong quarterly PAT growth (₹2,266 Cr vs ₹1,862 Cr).
• Manageable debt-to-equity ratio (0.18).
• Global leadership in aluminium and copper products.

Limitation

• ROE (8.98%) and ROCE (12.9%) are moderate compared to industry leaders.
• PEG ratio of 11.1 indicates stretched valuation.
• Dividend yield at 0.58% is relatively low.

Company Negative News

• DII holdings reduced by -0.82%.
• Valuation premium compared to industry peers.

Company Positive News

• FII holdings increased by 0.53%.
• Quarterly profit variation of 19.8% shows strong momentum.

Industry

• Metals industry is cyclical, driven by global demand and commodity prices.
• Industry P/E at 20.6 indicates sector is moderately valued compared to Hindalco’s 26.8.

Conclusion

⚖️ Hindalco demonstrates strong growth momentum and global leadership in metals, with manageable debt levels. However, valuations are stretched with high PEG and moderate return ratios. Entry is favorable around ₹780–₹820 for long-term investors seeking exposure to commodities, but caution is advised due to cyclical risks and premium pricing.