Motilal Oswal's research report on Hindalco
In its virtual analyst meet on Feb 22, Hindalco (HNDL) laid out its strategy and capital allocation roadmap for the next five years. While no new capex plans were announced, the focus remains on growing the downstream business in India and deleveraging the balance sheet, supported by strong cash flows in both India and Novelis. Net debt/EBITDA is targeted to fall to 2.5x by Mar’22 (from the peak of 3.8x in Jun’20). We reiterate HNDL as our top non-ferrous pick on the back of a 26% EPS CAGR over FY21–23E, driven by strong volumes, margins, and deleveraging. We roll forward our TP to Mar’22 and raise it to INR390.
We value it at INR390/sh on FY23 EV/EBITDA – 5x for India and 6x for Novelis. Reiterate Buy.
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