Hindalco up 4%, BNP cuts EPS estimates

MUMBAI: Shares of Hindalco Industries were up 4 per cent at Rs 50.45 in dull trade on Wednesday, but brokers see limited upside in the stock as the outlook on aluminium prices remains bearish.

BNP Paribas has retained ���reduce��� rating on the stock, but slashed target price to Rs 42 from Rs 68 earlier, and lowered FY10 net profit estimates by 50 per cent to Rs 770 crore.

The brokerage has turned cautious on Novelis--the Canadian aluminium major acquired by Hindalco in 2007--citing ���considerable��� slowdown in demand for aluminium rolled products in North America and Europe.

���We now expect Novelis will report a minor loss in 2009 due to lower volume and profit margin,��� a BNP note said.

���We continue to value Hindalco standalone and Novelis operations at 5 times FY10 (estimated) EV/EBITDA. We cut our TP (target price) by 38% to Rs 42 on lower operating performance. Our TP has also been affected by production shutdown at copper mines in Australia due to weak copper price,��� the note added.