Buy Hindalco; target of Rs 302: Motilal Oswal

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

live

• bselive
• nselive

Volume

Todays L/H

More

×

Motilal Oswal's research report on Hindalco

3QFY19 EBITDA of INR17.2b (-1% QoQ) came in 5% higher than our estimate of INR16.7b owing to the better-than-expected copper business performance. Finance cost was flat QoQ at INR4.8b, while other income increased 13% QoQ to INR2.1b. PAT declined 2% QoQ to INR7.1b (consol. PAT up by 45% YoY to INR46b YTD). Aluminum EBITDA/t declined 6% QoQ to USD551 (our estimate: USD532) due to lower LME prices, partly offset by lower cost of production and positive hedging impact (+INR900m). Aluminum production and sales were largely stable QoQ at 324kt and 323kt, respectively.

Outlook

We raise our FY19/20 EPS estimates by 3%/4% to factor in higher other income and hedging gains. Despite upgrade to earnings, we cut our TP to INR302 (prior: INR338) due to reducing EV/EBITDA valuation multiple from 6.5x to 6x, given the general de-rating of metal stocks and accounting for the INR6.5b outgo on the rights issue of Idea.

For all recommendations report, click here

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.

Read More