Khandwala Securities has recommended a hold rating on Hindalco Industries in its May 2, 2008 research report. "Higher volumes in aluminium and copper business along with enriched product mix lead to 5.5% rise in net sales to Rs 50,102 million during 4QFY08 as against Rs 47,489 million during the corresponding quarter last year. Steady other income and write back of earlier tax resulted in 49.3% increase in PAT to Rs 10,770 million as against Rs 7,213 million for the corresponding quarter last year."

"Going forward, higher volumes from asset sweating of existing plants, the brownfield expansions and continued cost focus together with effective working capital management to maximize free cash flow will be the major growth drivers for the company. The Novelis acquisition has resulted in debt of USD 3.1 billion for the company, which is still pinching the stock performance. The breakeven for Novelis is expected to be in FY2011. Moreover, LME aluminium has inched up during last quarter, which may result in further bleeding for Novalis. Nevertheless, its Indian operation would continue to do well, which along with treasury investment would limit the downside for the stock. We advice investors to ‘HOLD’ the stock," says Khandwala's research report.

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