Hindalco Industries Valuation Shifts from Attractive to Fair Amid Strong Market Performance

Valuation Metrics: A Closer Look

As of 10 Feb 2026, Hindalco’s price-to-earnings (P/E) ratio stands at 12.09, reflecting a moderate premium relative to its historical averages and peer group. This marks a shift from previously more attractive valuations, signalling that the market is pricing in improved earnings prospects but also recognising the stock’s recent price appreciation. The price-to-book value (P/BV) ratio is currently at 1.61, which is above the typical threshold for deep value but still within a reasonable range for a company with solid fundamentals and growth potential.

Enterprise value to EBITDA (EV/EBITDA) is reported at 8.00, indicating a fair valuation compared to industry norms where multiples often range between 6 and 10 for non-ferrous metals companies. The EV to EBIT ratio of 10.65 further supports this assessment, suggesting that investors are willing to pay a premium for operational earnings quality. Additionally, the PEG ratio of 0.32 remains impressively low, signalling that earnings growth expectations are strong relative to the current price, which is a positive sign for long-term investors.

Financial Performance and Returns

Hindalco’s return on capital employed (ROCE) and return on equity (ROE) are both robust, at 13.55% and 13.29% respectively. These figures underscore the company’s efficient use of capital and ability to generate shareholder value. Dividend yield, while modest at 0.52%, complements the growth story by providing some income to investors.

The stock price closed at ₹964.00 on 10 Feb 2026, up 2.29% from the previous close of ₹942.45. The 52-week trading range has been wide, with a low of ₹546.25 and a high of ₹1,029.60, reflecting significant volatility but also strong upward momentum over the past year.

Comparative Returns: Hindalco vs Sensex

Hindalco’s stock returns have substantially outpaced the Sensex across multiple time frames. Over the past week, the stock gained 3.42% compared to the Sensex’s 2.94%. The one-month return is even more striking, with Hindalco up 6.93% against a mere 0.59% for the Sensex. Year-to-date, the stock has surged 8.77%, while the Sensex has declined by 1.36%.

Longer-term performance is particularly impressive: a one-year return of 58.70% dwarfs the Sensex’s 7.97%, while three-year and five-year returns of 116.95% and 246.39% respectively highlight sustained outperformance. Over a decade, Hindalco has delivered a staggering 1,278.13% return, vastly exceeding the Sensex’s 249.97% gain.

Valuation Grade Revision and Market Implications

MarketsMOJO has revised Hindalco’s valuation grade from “attractive” to “fair” as of 18 Nov 2025, reflecting the stock’s price appreciation and the narrowing margin of safety for new investors. The company’s Mojo Score currently stands at 75.0, with a Mojo Grade of “Buy,” down from a previous “Strong Buy.” This adjustment signals a more cautious stance, acknowledging that while the stock remains a compelling investment, the upside potential is now more balanced against valuation risks.

Despite the grade downgrade, Hindalco’s market capitalisation grade remains at 1, indicating its status as a large-cap stock with significant liquidity and institutional interest. The valuation shift is consistent with the broader sector trend, where rising commodity prices and improving global demand have lifted share prices across non-ferrous metals companies.

Sector and Peer Context

Within the non-ferrous metals sector, Hindalco’s valuation metrics are broadly in line with peers, who have also seen P/E ratios move higher amid improving earnings visibility. The EV to EBITDA multiple of 8.00 is competitive, neither excessively stretched nor undervalued, suggesting that investors are pricing in steady operational performance without excessive exuberance.

The company’s PEG ratio of 0.32 remains a standout metric, indicating that earnings growth is expected to outpace the valuation multiple expansion. This contrasts favourably with many peers whose PEG ratios have risen above 1.0, signalling more expensive valuations relative to growth prospects.

Risks and Considerations

While Hindalco’s fundamentals remain strong, investors should be mindful of potential headwinds. Commodity price volatility, currency fluctuations, and global economic uncertainties could impact earnings and valuation multiples. Additionally, the modest dividend yield suggests that capital appreciation remains the primary driver of returns, which may not suit income-focused investors.

Furthermore, the narrowing valuation margin means that any disappointment in earnings or sector outlook could lead to sharper price corrections. As such, a balanced approach considering both growth potential and valuation risks is advisable.

Conclusion: Valuation Reflects Growth, But Caution Advised

Hindalco Industries Ltd’s transition from an attractive to a fair valuation grade reflects the stock’s strong price performance and improving fundamentals. The company’s solid returns, efficient capital utilisation, and favourable growth prospects justify a premium valuation, yet the reduced margin of safety calls for a more measured investment approach.

Investors should weigh the company’s robust financial metrics and sector leadership against the risks inherent in commodity markets and valuation pressures. With a Mojo Grade of “Buy” and a Mojo Score of 75.0, Hindalco remains a compelling option for growth-oriented portfolios, albeit with a tempered outlook compared to its previous “Strong Buy” status.

Overall, Hindalco’s valuation parameters suggest a stock that has matured in the eyes of the market, rewarding patient investors while signalling the need for careful monitoring of earnings and sector dynamics going forward.

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