Prabhudas Lilladher is bullish on Hindalco Industries India has recommended buy rating on the stock with a target price of Rs 205 in its research report dated August 13, 2020.
Prabhudas Lilladher's research report on Hindalco Industries
Novelis’ adj. EBITDA in Q1FY21 fell 29% QoQ/32% YoY at US$253mn (PLe:US$247mn) due to 38% QoQ/41% YoY fall in Novelis’ legacy operation’s EBITDA at US$219mn, offset by US$34mn of EBITDA contributed by Aleris. High margin automotive volumes fell 50% YoY, resulting in impact of US$72mn on EBITDA. Company witnessed strong recovery in automotive and specialty product (electronic and appliances segment) portfolio post May with volumes back to pre-covid-19 levels. As expected, volumes in its beverage cans segment remained unaffected due to its underlying recession proof consumption nature. Building and construction (B&C) product (new segment with merger of Aleris) segment is expected to revive gradually as the economy in North America returns back to normalcy. Aerospace segment, though having small share, would remain severely impacted due to restrictions on travel. Debt gearing have shoot up sharply to FY18 levels.
However, we expect it to comfortably fall to ~3x in a year’s time on the back of strong margin profile and divestment of Aleris’ Lewisport and Duffel plants. We reiterate BUY with TP of Rs205, EV/EBITDA of 5.5x (earlier 5.2x) FY22e.
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