Buy Hindalco Industries, target Rs 235: JM Financial
Buy Hindalco Industries Ltd. at a price target of Rs 235.
By ETMarkets.com |
JM Financial has a buy call on Hindalco Industries Ltd. with a target price of Rs 235. The current market price of Hindalco Industries Ltd. is 200.5 Time period given by analyst is year when Hindalco Industries Ltd. price can reach defined target.
4Q results in line with JMfeHindalco reported 4Q standalone EBITDA of Rs 13.5bn, inline with our estimates. EBITDA increased c.14.4 per cent YoY, driven by increase in EBITDA of both aluminium and copper businesses by 19 per cent and 7 per cent YoY respectively. 4Q revenue for aluminium increased c.10.7 per cent YoY driven by higher volume and realisation, while copper revenue was up 49 per cent YoY driven by c.25 per cent increase in realisation. In FY17, standalone EBITDA increased c.44 per cent YoY to Rs 48.1bn, primarily driven by higher volumes, lower input costs and stable operations in aluminium business, while copper business EBITDA remained flat due to lower volumes, by-product realization and TcRc.
Novelis achieved a billion dollar EBITDA in FY17 In 4Q, Novelis reported adjusted EBITDA of US$292mn (+8 per cent YoY. Record EBITDA was driven by higher automotive sheet shipments (+26 per cent YoY). FY17 adj. EBITDA crossed a billion dollar with 33 per cent YoY growth, driven by higher auto shipments and operating efficiencies. The company improved its metal mix by increasing recycled inputs to 55 per cent in FY17 vs. 53 per cent in FY16. The company achieved the 4x target net debt/EBITDA and reported 3.9x net debt/EBITDA in FY17. Novelis entered into a Joint Venture agreement in May’17 with Kobe Steel to sell 50 per cent of its ownership interest in its Ulsan, South Korea facility for US$315 mn.
Quick ramp-up and significant coal security to drive earnings in India ops Timely ramp-up of new capacity addition projects at Mahan, Aditya & Utkal along with c.2/3rd coal security achieved by the company by way of linkages and auctioned mines has placed the company favourably to benefit from any recovery in aluminium prices.
All-round improvement in profitability at India/Novelis; maintain BUY Significant cost curtailment at Indian Operations, driven by scale benefits, lower power/carbon costs and increased coal security, is likely to lead to an upwards earning trajectory. Automotive business at Novelis promises an improving earnings trajectory, while the steady Indian copper business lends support. Our SOTP fair value now stands at Rs 235/sh implying an upside of c.16 per cent. Maintain BUY.
4Q results in line with JMfeHindalco reported 4Q standalone EBITDA of Rs 13.5bn, inline with our estimates. EBITDA increased c.14.4 per cent YoY, driven by increase in EBITDA of both aluminium and copper businesses by 19 per cent and 7 per cent YoY respectively. 4Q revenue for aluminium increased c.10.7 per cent YoY driven by higher volume and realisation, while copper revenue was up 49 per cent YoY driven by c.25 per cent increase in realisation. In FY17, standalone EBITDA increased c.44 per cent YoY to Rs 48.1bn, primarily driven by higher volumes, lower input costs and stable operations in aluminium business, while copper business EBITDA remained flat due to lower volumes, by-product realization and TcRc.
Novelis achieved a billion dollar EBITDA in FY17 In 4Q, Novelis reported adjusted EBITDA of US$292mn (+8 per cent YoY. Record EBITDA was driven by higher automotive sheet shipments (+26 per cent YoY). FY17 adj. EBITDA crossed a billion dollar with 33 per cent YoY growth, driven by higher auto shipments and operating efficiencies. The company improved its metal mix by increasing recycled inputs to 55 per cent in FY17 vs. 53 per cent in FY16. The company achieved the 4x target net debt/EBITDA and reported 3.9x net debt/EBITDA in FY17. Novelis entered into a Joint Venture agreement in May’17 with Kobe Steel to sell 50 per cent of its ownership interest in its Ulsan, South Korea facility for US$315 mn.
Quick ramp-up and significant coal security to drive earnings in India ops Timely ramp-up of new capacity addition projects at Mahan, Aditya & Utkal along with c.2/3rd coal security achieved by the company by way of linkages and auctioned mines has placed the company favourably to benefit from any recovery in aluminium prices.
All-round improvement in profitability at India/Novelis; maintain BUY Significant cost curtailment at Indian Operations, driven by scale benefits, lower power/carbon costs and increased coal security, is likely to lead to an upwards earning trajectory. Automotive business at Novelis promises an improving earnings trajectory, while the steady Indian copper business lends support. Our SOTP fair value now stands at Rs 235/sh implying an upside of c.16 per cent. Maintain BUY.
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