Feb 14, 2013, 03.32 PM | Source: Moneycontrol.com

Angel Broking neutral on Hindalco

Angel Broking has maintained neutral rating on Hindalco Industries in its February 12, 2013 research report.

Angel Broking has maintained neutral rating on Hindalco Industries in its February 12, 2013 research report.

“Hindalco Industries (Hindalco)’s standalone net sales increased by 3.0percent yoy to Rs6,790cr (below our estimate of Rs7,199cr) mainly on account of lower than expected aluminium production during the quarter. Hindalco’s standalone EBITDA decreased by 18.6percent yoy to Rs582cr and adjusted net profit decreased 35.8percent yoy to Rs289cr (below our estimate of Rs404cr).”

“For 3QFY2013 Novelis posted a 5.7percent yoy decline in net sales due to lower conversion premiums and lower aluminium prices. The EBITDA, however, grew by 30.1percent yoy to $173mn. Further, Novelis’ net profit stood at US$3mn as compared to a net loss of US$12mn in 3QFY2012.”

“Although Hindalco is expanding its capacities three-fold over the coming four-five years, low aluminium prices, sticky costs and delay in commencement of mining from captive blocks are expected to mute its profitability growth. In the near-term, there is lack of clarity over production from the Mahan coal block for its upcoming Mahan smelter. Without captive coal block, the Mahan smelter (expected to commission in FY2014) is expected to face cost pressures, resulting in lower return ratios over the next two years. We maintain our neutral recommendation on the stock,” says Angel Broking research report.

Institutional holding more than 40% in Indian cos

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