Novelis' EBITDA stood at $322 million or Rs 2,300 crore, which is close to or higher than Hindalco's standalone (including Utkal Alumina) EBITDA of Rs 1,926 crore in Q3 FY19
At the current market price of Rs 279.3 per share, the stock is trading at nine times its FY20 estimated earnings and 6.2 times based on an estimated FY20 enterprise value to EBITDA, which is reasonable
We do see scope for re-rating should the bank successfully complete its journey of reaching high teen RoE in the future
The weakness may be a perfect time to accumulate the stock for the long term
One needs to closely watch for pricing growth, which was a shade lower than expectations. It possibly reflects upon recent moderation in cost inflation.
While the business has been performing well, the valuations seem equally attractive at current levels considering the long headroom for growth and earnings visibility.