Macquarie on Tata Steel, Hindalco: Where should investors put money?

Global brokerage Macquarie Group has shared a mixed view on Indian metal stocks. It remains positive on Tata Steel but maintains a cautious stance on Hindalco Industries.

Tata Steel: Outperform maintained, target at Rs 241

Macquarie has maintained its ‘Outperform’ rating on Tata Steel with a target price of Rs 241. The brokerage said domestic steel price stability and improving sentiment in Europe are likely to support the stock.

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It expects Tata Steel’s European business to see better cash flows in the coming months. This comes after a long period of pressure in the region.

The brokerage also sees volume growth ahead. This will be supported by the ramp-up at the Kalinganagar plant and additional capacity of 0.75 million tonnes from the electric arc furnace (EAF).

Shares of Tata Steel were trading at around Rs 211.69, down 0.20 per cent at 10:30 AM.

Tata Steel Q3FY26: Profit jumps over 8x YoY

Tata Steel reported a net profit of Rs 2,689 crore for the December quarter (Q3FY26). This is more than eight times higher than Rs 327 crore in the same period last year.

Revenue from operations rose 6 per cent YoY to Rs 57,002 crore. Revenue from the India business stood at Rs 35,725 crore, while EBITDA came in at Rs 8,291 crore, implying a margin of 23 per cent.

Crude steel production increased 12 per cent YoY to 6.34 million tonnes. The company said operational performance remained strong. EBITDA rose 39 per cent to Rs 8,199 crore and margin improved by 340 basis points to 14.4 per cent.

In Europe, Netherlands revenue stood at 1,354 million euros with EBITDA of €55 million. Liquid steel production was 1.68 million tonnes, while deliveries were 1.40 million tonnes. In the UK, revenue came in at 468 million pounds with an EBITDA loss of 63 million pounds. Deliveries stood at 0.52 million tonnes and were impacted by weak demand and steady imports.

Hindalco: Neutral stance, limited upside

On Hindalco, Macquarie has maintained a ‘Neutral’ rating with a target price of Rs 1,080.

The brokerage said the company is currently in a “sweet spot”. However, the upside looks capped. It noted that aluminium prices have already risen about 25 per cent year-to-date, and this is largely factored into the stock price.

Macquarie also flagged that Hindalco’s hedge policy may limit further gains. In addition, valuations at around 6.7x September 2027 estimated EV/EBITDA leave limited room for re-rating.

Shares of Hindalco were trading at around Rs 1,023.50, down 1.49 per cent at around 10:30 AM.

Hindalco Q3FY26: Profit falls on Novelis disruption

Hindalco reported a consolidated net profit of Rs 2,049 crore for the quarter ended December 31, 2025. This is down 45 per cent YoY from Rs 3,735 crore in the year-ago period.

The company attributed the decline to disruption at its subsidiary Novelis Inc.. The Novelis aluminium plant in Oswego, New York, saw two major fire incidents in the hot mill area on September 16 and November 21, 2025.

Novelis, which is headquartered in Atlanta and is a wholly owned subsidiary of Hindalco, said on February 11 that 70–80 per cent of the free cash flow and adjusted EBITDA impact is expected to be recovered through insurance.

The company estimates a total free cash flow impact of between $1.3 billion and $1.6 billion. It added that the Oswego hot mill is likely to restart by late Q2 calendar year 2026.

Novelis said it is working closely with customers and using its global network and external suppliers to reduce the impact on deliveries.

Meanwhile, Hindalco’s revenue from operations rose 14 per cent YoY to Rs 66,521 crore. EBITDA increased 5 per cent YoY to Rs 8,543 crore. Basic earnings per share declined 45 per cent YoY to Rs 9.23 from Rs 16.82 in the same quarter last year.