Buy Hindalco; target of Rs 580: Motilal Oswal

Motilal Oswal's research report on Hindalco

Hindalco (HNDL)’s 2QFY24 consolidated revenue was down 4% YoY to INR542b, 13% above our estimate of INR478b. While revenue from copper business fared better, driven by record shipments, revenues from the aluminum vertical was down due to lower metal prices. Consolidated EBITDA increased 5% YoY to INR56b, which was in line with our estimate of INR54b. EBITDA improved on the back of lower input prices and reduction in power expense. HNDL’s finance cost rose 18% YoY to INR10b, while depreciation came in at INR18b (up 8% YoY) in 2QFY24. APAT was down 2% YoY to INR22b, in line with our estimate of INR23b. The slight reduction in APAT was due to higher finance cost and depreciation, which was partially set off by higher other income.

Outlook

We reiterate our BUY rating with an SoTP-based TP at INR580.