Buy Hindalco Industries Ltd. target Rs 230: Centrum Broking
Buy Hindalco Industries Ltd. at a price target of Rs 230.
By ETMarkets.com | Updated:
Centrum Broking has Buy call on Hindalco Industries Ltd. with a target price of Rs 230 .The current market price of Hindalco Industries Ltd. is Rs 196.6.
Hindalco continued to deliver superlative operational performance from domestic aluminium business (EBITDA/t at US$418) led by industry leading cost positioning and optimum utilisations, while Novelis’ performance improved materially and was best ever since Q2FY12 (EBITDA/t at US$370). We like HNDL on account of i) strong earnings visibility from low cost aluminium asset base with favourable coal supply secured, ii) increased EBITDA contribution from Novelis, iii) strong capex discipline resulting in high FCF generation and iv) relentless focus on reducing Net debt/EBITDA through material deleveraging over FY18-19E.
Hindalco’s overall aluminium portfolio CoP stands at the 11th percentile in the global cost curve led by sharp cost reduction in several previous quarters and improving coal availability scenario (around 70% of coal requirement tied up through captive/linkage) at competitive costs. LME prices have improved in the last few months led by better demand-supply situation, a rising global cost curve and expectations of production cut in China due to environmental concerns. Management focus on driving further cost savings, increasing downstream volumes (~15% CAGR over next few years) and deleveraging the balance sheet remains intense.
Hindalco continued to deliver superlative operational performance from domestic aluminium business (EBITDA/t at US$418) led by industry leading cost positioning and optimum utilisations, while Novelis’ performance improved materially and was best ever since Q2FY12 (EBITDA/t at US$370). We like HNDL on account of i) strong earnings visibility from low cost aluminium asset base with favourable coal supply secured, ii) increased EBITDA contribution from Novelis, iii) strong capex discipline resulting in high FCF generation and iv) relentless focus on reducing Net debt/EBITDA through material deleveraging over FY18-19E.
Hindalco’s overall aluminium portfolio CoP stands at the 11th percentile in the global cost curve led by sharp cost reduction in several previous quarters and improving coal availability scenario (around 70% of coal requirement tied up through captive/linkage) at competitive costs. LME prices have improved in the last few months led by better demand-supply situation, a rising global cost curve and expectations of production cut in China due to environmental concerns. Management focus on driving further cost savings, increasing downstream volumes (~15% CAGR over next few years) and deleveraging the balance sheet remains intense.
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