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Last Updated : Jun 24, 2019 03:12 PM IST | Source: Moneycontrol.com

Hold Hindalco; target of Rs 200: ICICI Direct

ICICI Direct recommended hold rating on Hindalco with a target price of Rs 200 in its research report dated May 17, 2019.

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ICICI Direct's research report on Hindalco


Hindalco reported a muted set of Q4FY19 numbers wherein topline came in higher than our estimates while EBITDA and PAT came in lower than our estimate. Higher than expected operating costs prices and below than expected performance from the Utkal division adversely impacted the operational performance. Domestic standalone operations posted a topline of Rs 12373 crore (higher than our estimate of Rs 11225.6 crore). Aluminium segment reported sales of 325000 tonnes while copper sales were at 100000 tonne. Utkal alumina reported EBIDTA of Rs 428 crore, lower than our estimate of Rs 550 crore. EBITDA of Hindalco standalone + Utkal came in at Rs 1358 crore (lower than our estimate of Rs 1664.7 crore). The ensuing PAT for Hindalco standalone + Utkal was at Rs 506 crore, down 18% YoY, 29% QoQ, lower than our estimate of Rs 593.8 crore. We value the stock on SoTP basis and arrive at a target price of Rs 200/share, assigning a HOLD recommendation to the stock.


Outlook


The operating environment for the aluminium industry remains challenging given subdued aluminium prices. Hence, we expect the consolidated EBITDA margin to hover ~11% mark for both FY20E and FY21E (11.9% in FY19). We continue to value Hindalco on SOTP basis and arrive at a target price of Rs 200. We maintain our HOLD rating on the stock.

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First Published on Jun 24, 2019 03:12 pm
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