Feb 15, 2017 04:46 PM IST | Source:

Buy Hindalco Industries; target of Rs 229: Edelweiss

Edelweiss is bullish on Hindalco Industries has recommended buy rating on the stock with a target price of Rs 229 in its research report dated February 13, 2017.

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Edelweiss' research report on Hindalco Industries

Hindalco Industries’ (Hindalco) Q3FY17 standalone EBITDA zoomed 76% YoY to INR 11.9bn on impressive performance of aluminium division (Al). Al EBITDA jumped 147% YoY to INR 8.8bn on higher LME Al price, cost efficiencies due to captive mines and higher volumes. However, EBITDA came marginally below consensus following slightly subdued performance of copper division.


Going ahead, we believe that Hindalco will continue to benefit from progressively higher captive coal, product mix refinement and deleveraging. The stock is trading at 5.8x FY18E EBITDA versus 7.5x for global players. Rolling over FY19E, we have revised our SoTP‐based target price to INR 229 (INR 220 earlier), implying exit EV/EBITDA multiple of 6.4x (lower than 8 years trading band of 8.0x). Maintain ‘BUY’.

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