Centrum is bullish on Hindalco has recommended buy rating on the stock with a target price of Rs 340 in its research report dated November 02, 2018.
Centrum's research report on Hindalco
We maintain buy on Hindalco (HNDL) with a TP of Rs340. HNDL’s domestic aluminium business beat expectations again despite cost pressures (blended EBITDA/t at US$597 on Utkal inclusive basis) led by industry leading cost positioning and optimum utilisations. Novelis’ performance was best ever (EBITDA/t at US$440) and guidance was strong. We like HNDL on account of i) strong earnings visibility from low cost domestic aluminium asset base, ii) increasing proportion of value added downstream conversion business EBITDA share in consolidated entity with acquisition of Aleris and increasing automotive share at Novelis, iii) high FCF generation and reducing net debt/EBITDA with carefully calibrated capex and iv) attractive valuations with FCF/EV yield of 9% and EV/EBITDA of 5.2x on FY20E basis.
We maintain our EV/EBITDA multiple at 6.5x for domestic operations and reduce multiple for Novelis and Aleris to 6.5x (vs 7x earlier) to account for global uncertainty to arrive at our TP of Rs340. Maintain Buy and retain HNDL as our top large cap pick in Metals. Key downside risks are lower LME prices and lower volumes.
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.