ICICI Securities research report on Hindalco Industries
Hindalco highlighted potential spend of US$4.58bn in Novelis and US$3.43bn in India operations over FY23-27E. Management expects ~US$2bn of FCF post sustaining capex and has created a roadmap to allocate 75% of the same toward growth projects. 15% will be allocated toward deleveraging and 8-10% toward shareholder returns. In Novelis, incremental capex of US$3.5-3.8bn will take capacity up by 1.3mtpa. We would have ideally liked to see an upping of the EBITDA/te guidance as well. In the absence of the same, the return potential for incremental investment appears to be a notch below what has been achieved in the previous Novelis expansions (FY11 + FY19). Management followed through on its previous prompt of looking at brownfield smelter expansion (0.185mtpa) in India at a capital cost of US$3,750/te – the project is still at the appraisal stage; with renewable power sourcing.
Outlook
Management continues to stay focussed on improving the downstream mix as domestic aluminium capacity reaches 1.5mtpa. We maintain BUY.
More Info
At 17:30 Hindalco Industries was quoting at Rs 569.60, down Rs 30.20, or 5.04 percent.
It has touched an intraday high of Rs 599.65 and an intraday low of Rs 568.20.
It was trading with volumes of 599,387 shares, compared to its thirty day average of 481,335 shares, an increase of 24.53 percent.
In the previous trading session, the share closed down 4.94 percent or Rs 31.20 at Rs 599.80.
The share touched its 52-week high Rs 636.00 and 52-week low Rs 321.00 on 29 March, 2022 and 31 March, 2021, respectively.
Currently, it is trading 10.44 percent below its 52-week high and 77.45 percent above its 52-week low.
Market capitalisation stands at Rs 127,998.96 crore.
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