Hindalco (HNDL IN) Buy: Strong earnings; Oswego restart in next few weeks; no Bay Minette capex inflation

研报英文原文证据摘录

Hindalco (HNDL IN) Buy: Strong earnings; Oswego restart in next few weeks; no Bay Minette capex inflation

mbly completed

52-WEEK PRICE (INR)

and cold commissioning underway. Given the material earnings and free cash flow impact

1400.00

from the disruption, a timely restart and disciplined ramp-up are critical to restoring

volumes and margins and should help address a key investor concern. Management now 970.00

estimates the total fire impact at cUSD1.7bn of free cash flow (vs prior guidance of 540.00

USD1.3-1.6bn), with c70-75% potentially recoverable through insurance and an 05/25 11/25 05/26

Target price: 1310.00

expectation to recover at least c50% of the claimable amount within FY27. High: 1103.30 Low: 631.10 Current: 1053.10

Source: LSEG IBES, HSBC estimates

On Bay Minette (BM), the project remains on track and capex stays at USD5bn: Our

conversations on Hindalco have highlighted investor expectations of a potential increase

Pinakin Parekh*

in the Bay Minette project cost above USD5bn guidance. The company has maintained Senior Analyst, India Metals and Cement

capex guidance “in the order of” USD5bn, with USD3.2bn spent so far. Cold mill HSBC Securities and Capital Markets (India) Private Limited

pinakin.parekh@hsbc.co.in

commissioning started in March, with full commissioning expected in 2HCY26. +91 22 40891549

FCF to turn positive by end-FY27: This is largely supported by a step-down in Bay Shrikant Lakhani*

Analyst, India Metals and Cement

Minette capex, particularly from 4QFY27. FY27 capex is guided at USD2.1-2.4bn HSBC Securities and Capital Markets (India) Private Limited

(cUSD1.7bn for the BM, USD350m for maintenance). Net debt increased to USD6.7bn shrikant.h.lakhani@noexternalmail.hsbc.com

+91 80 3001 4021