Axis Direct's research report onHindalco Industries
Both Alumina and Aluminium operations have first quartile cost positioning on global cost curve. Utkal Alumina Refinery is among the lowest cost producer of Alumina with COP of USD 130/ton. The recent increase in global coal prices is likely to push up Hindalco’s aluminium COP by less than 5% due to fixed price coal linkages and higher plant efficiencies.
OutlookWhile we maintain our EBITDA estimates for FY18/19, we reduce our EPS estimates to Rs 21/26(Rs 24/29 earlier) largely due to higher effective tax rate assumption. We roll over the target price to FY19 and value the company at 6x EV/EBITDA for India operations and 6.5x EV/EBITDA for Novel is. Our revised target price stands at Rs 246 (28% upside from CMP of Rs 192).Maintain BUY.
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