ICICI Direct recommended hold rating on Hindalco Industries with a target price of Rs 212 in its research report dated February 13, 2019.
ICICI Direct's research report on Hindalco Industries
Hindalco reported a steady state Q3FY19 performance. Domestic operations posted a topline of Rs 11938 crore (up 8% YoY, 10% QoQ, higher than our estimate of Rs 10849.5 crore). Aluminium segment reported sales of 323000 tonnes (vs. our estimate of ~330000 tonne) while copper sales were at 99000 tonnes (vs. our estimate of ~100000 tonne) Standalone Hindalco EBITDA came in at Rs 928 crore (down 30% YoY, 15% QoQ), lower than our estimate of Rs 1179.3 crore. The EBITDA margin came in at 7.8% (vs. Q3FY18: 11.9% and Q2FY19: 10.1%). Utkal Alumina reported EBIDTA of Rs 771 crore, higher than our estimate of Rs 450 crore. EBITDA of Hindalco standalone + Utkal came in at Rs 1717 crore (higher than our estimate of Rs 1629 crore) PAT for Hindalco standalone + Utkal was at Rs 713 crore, up 47% YoY, down 2% QoQ.
The operating environment for the aluminium industry remains challenging given subdued aluminium prices. Hence, we downgrade our estimates factoring in the current weakness in LME aluminium and copper prices. We continue to value Hindalco on SOTP basis and arrive at a target price of Rs 212. We maintain our HOLD rating on the stock.
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