Moneycontrol
Last Updated : Sep 18, 2018 01:30 PM IST | Source: Moneycontrol.com

Buy Hindalco; target of Rs 340: Centrum

Centrum bullish on Hindalco has recommended buy rating on the stock with a target price of Rs 340 in its research report dated August 10, 2018.

Broker Research @moneycontrolcom
 
 
live
  • bselive
  • nselive
Volume
Todays L/H
More

Centrum's research report on Hindalco


We maintain buy on Hindalco (HNDL) with a revised TP of Rs340. HNDL’s domestic aluminium business continued to deliver a solid operational performance (Blended EBITDA/t at US$762 on Utkal inclusive basis) led by industry leading cost positioning and optimum utilisations. Novelis’ performance remained solid (EBITDA/t at US$417) and Aleris (acquisition underway) also performed strongly with EBITDA/t of US$361. We like HNDL on account of i) strong earnings visibility from low cost domestic aluminium asset base with domestic coal supply in place, ii) increasing proportion of non-commodity linked EBITDA share in consolidated entity with acquisition of Aleris, iii) high FCF generation, and iv) reducing net debt/EBITDA through faster repayments and carefully calibrated capex.


Outlook


We maintain our EV/EBITDA multiple at 6.5x for domestic operations, 7x for Novelis and 7x for Aleris on FY20E earnings to arrive at our revised 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.

First Published on Aug 20, 2018 04:44 pm
Loading...
Sections
Follow us on
Available On
PCI DSS Compliant