Hindalco Inds. (HINDALCO)

FairStock Score: 78/100 — STEADY

Score breakdown: P/E: 2/3 · ROCE: 1/2 · Growth: 0/2 · Dividend: 0/1

Key Financials

Strengths

• P/E of 12.00 and PEG of 0.86 make valuation reasonable despite 13.98% sales growth and 15.74% profit growth.
• ROCE of 14.80% with ROE of 11.92% and Debt/Equity of 0.56 shows disciplined capital use and manageable leverage.
• Piotroski F-Score of 7/9 reflects sound financial fundamentals across profitability, leverage, and efficiency.
• Five-year revenue CAGR of 12.56% demonstrates consistent topline compounding, supported by latest quarter sales of ₹66,521 crore.

Concerns

• EV/EBITDA of 228.36 is a glaring outlier versus P/E of 12.00; it needs to be explained before trusting the valuation.
• Free cash flow is negative at ₹-199 crore, so reported earnings are not fully converting into cash.
• Current ratio of 1.27 and Altman Z-Score of 2.57 signal a modestly strained balance sheet.
• Dividend yield of 0.54% offers little cushion, and the 52-week range shows commodity-driven price volatility.

AI Analysis

Let me evaluate Hindalco as a business, not a ticker. Aluminium is a cyclical commodity, and I don't see a wide moat; so I ask whether the company has a durable cost or scale edge and whether the price leaves room for error. The financial record is respectable: sales grew 13.98%, profit grew 15.74%, and the five-year revenue CAGR is 12.56%. ROE is 11.92% and ROCE is 14.80%, while debt/equity is only 0.56; that suggests management is creating reasonable returns without piling on leverage. The Piotroski score of 7/9 also tells me the fundamentals are in decent shape. The FairStock Score of 72/100 also labels it steady. At ₹1,041.35, the stock trades at 12.00 times earnings and 1.74 times book value, which sounds reasonable for a double-digit grower. The PEG of 0.86 reinforces that. But I cannot ignore the quirks. Free cash flow is negative at ₹-199 crore, so earnings are not fully showing up in cash. The current ratio of 1.27 is thin, and the Altman Z-score of 2.57 sits in the grey zone. More troubling, the reported EV/EBITDA of 228.36 is completely out of line with the P/E; either the EBITDA figure is distorted or the enterprise value is hiding a heavy debt burden. I would not invest until I understand that. The dividend yield is only 0.54%, so I am not being paid to wait. The Graham Number works out to ₹982.93, giving just 5.92% margin of safety at the current price. That is not enough for a commodity business whose shares traded between ₹688 and ₹1,176 over the past year. This is a decent cyclical company, but at this price it is not the kind of bargain I demand. I would wait for a better entry or clearer evidence that cash generation has caught up with reported profits.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer