Buy Hindalco Industries; target Rs 175: Motilal Oswal

Motilal Oswal is bullish on Hindalco Industries and has recommended buy rating on the stock with a target price of Rs 175 in its February 13, 2013 research report.
  • Language
  • App
  • Subscriptions
  • Specials
  • Sign-In
  • Register
GeStepAhead GrowMyMoney
moneycontrol.com

Home » News » Recommendations

Feb 14, 2013, 02.31 PM | Source: Moneycontrol.com

Buy Hindalco Industries; target Rs 175: Motilal Oswal

Motilal Oswal is bullish on Hindalco Industries and has recommended buy rating on the stock with a target price of Rs 175 in its February 13, 2013 research report.

Like this story, share it with millions of investors on M3

Buy Hindalco Industries; target Rs 175: Motilal Oswal

Motilal Oswal is bullish on Hindalco Industries and has recommended buy rating on the stock with a target price of Rs 175 in its February 13, 2013 research report.

Post Your Comments

Share Cancel

Motilal Oswal (more)

CMD, Motilal Oswal Financial Services (MOFSL) |

Motilal Oswal is bullish on Hindalco Industries and has recommended buy rating on the stock with a target price of Rs 175 in its February 13, 2013 research report.

"Hindalco's standalone (S/A) EBITDA increased 13% QoQ to INR5.8b, in line with est of INR6b. Aluminum segment EBITDA fell short of est due to pressure on product premium, however was offset by better operating performance of copper segment, helped by better TcRc margins despite lower acid prices.

Adj PAT increased 21% QoQ to INR4.3b due to higher EBITDA and other income partially offset by higher interest cost. Interest expense increased sharply to INR1.7b due to the recently-raised INR60b NCD.

Adjusted EBITDA was at USD185m, below est of USD252m, due to higher-than-expected loss of volumes on implementation of ERP system in North America and pressure on margins. ERP system implementation knocked off USD39m from the adjusted EBITDA. Including this, adjusted EBITDA would have been USD224m (USD345/t) v/s est of USD252m (USD350/t).

Barring auto segment, the margin pressure is visible across all segments due to slowdown in European and Chinese demand. Novelis is trying to mitigate the pressure on margins by effective cost management, increased recycling (+5pp YoY to 44%), and growth in high margin businesses of auto segment in North America and CAN business in Brazil.

We expect capex to peak for Hindalco in FY13, with a total estimated consolidated capex of USD2.5b across all its projects. Mahan and Utkal alumina projects in India and Novelis' projects will start generating cash flows in FY14. Hence, we expect deleveraging of balance sheet to start in FY14.

We have cut FY13E/FY14E/FY15E EPS by 12%/4%/13% to factor lower margins in Novelis and lower volumes in standalone operations. SOTP is cut by 6% to INR175. Stock is trading at FY15E EV/EBITDA of 5.7x. Maintain Buy with a target price of Rs 175," says Motilal Oswal research eport.

Institutional holding more than 40% in Indian cos

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click here

Buy, Hold, Sell ? Hear it first on M3
Buy Hindalco Industries; target Rs 175: Motilal Oswal

See all

Get started using your favorite social network

or

Login using moneycontrol ID

Username
Password

Need help logging in? Reset password.

Don´t have an account? Sign Up

Get started using your favorite social network

or

Simply sign up using this short form

* mandatory

UserName*

Username should be atleast 4 character

Password*

Password should be 8 or more characters,
atleast 1 number, 1 symbol & 1 upper case letter

Alert

Your Password should contain
  • 8 or more characters
  • At least 1 number
  • At least 1 symbol
  • At least 1 upper case letter
Confirm Password*
Email
Already have an account? Login