Reduce Hindalco Industries; target of Rs 115: Dolat Capital

Dolat Capital is bearish on Hindalco Industries and has recommended reduce rating on the stock with a target of Rs 115 in its February 13, 2013 research report.
 
“Hindalco reported a net sales of Rs 68.7bn 3.0percentYoY/11.0percentQoQ vs our est of Rs 70.35bn on back of lower premium in Al and lower by product credit in Cu business.EBITDA rose by 13percentQoQ to Rs 5.82bn (DCe:Rs 6.2bn) and was lower than our estimate due to marginal lower profits of Aluminum and Copper. EBIT for Al division increased by 21.6percentQoQ to Rs 2.06bn (DCe: Rs 2.14bn) due to higher LME and increase in volumes. Copper volumes were inline with our est of 84,000 tonnes.EBIT for Cu division increased by 8percentQoQ to Rs 2.25bn (DCe: Rs 2.32bn) was lower due to lower by product realizations Higher other income which increased by 140.3percentQoQ to Rs 3.18bn (DCe:Rs 1.2bn) was boosted by non recurring income of Rs 1.44bn during the quarter. PAT declined by 3.8percentYOY but increased sequentially by 20.8percent to Rs 4.33bn primarily boosted by higher other income despite lower operating performance.”
 
“Novelis reported a PAT of USD 3mn which was impacted by USD39mn on account of ERP implementation leading to lower volumes and higher start up cost . Novelis’s net sales at USD 2.321bn (- 5.7percentYoY) primarily lower due to 11percentfall in premiums (pricing pressure) and LME decline by 4percent. Adj. EBITDA per tonne at USD266 per tonne declined by 14.6percentYoY/26.6percentQoQ to USD 185mn as it got impacted by supply disruptions due to ERP implementation leading to lower volumes (USD19mn) and higher start up cost (USD 20mn). Adj EBITDA fell by USD 185mn (-13.1percentYoY/- 32percentQoQ). Higher tax rate of 78.6percent led to a PAT of USD 3mn (vs loss of USD12mn in Q3FY12) . The profits were impacted by lower operating profits,” says Dolat Capital research report.

FIIs holding more than 30% in Indian cos

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