Buy Hindalco Industries, target Rs 315: Kotak Institutional Equities

Kotak Institutional Equities has a buy call on Hindalco Industries Ltd. with a target price of Rs 315. The current market price of Hindalco Industries Ltd. is Rs 231.2. Time period given by the brokerage is a year when Hindalco Industries Ltd. price can reach defined target. . Hindalco Industries Ltd., incorporated in 1958, is a largecap company with a market cap of Rs 51905.60 crore.

Investment rationale by Kotak

We expect Hindalco to benefit from multiple earnings tailwinds across businesses as (1) aluminum recycling spreads have improved to multi-year highs in the US, (2) BRL/US$ rate has weakened sharply—both of these can act as strong triggers for Novelis. In India, higher aluminum prices (partially hedged), improved copper premiums and weaker INR/US$ will aid earnings. Over the long term, we remain positive on the aluminum price outlook due to continued deficit outside China and fast declining inventories. The soon-to-be published policy by China on captive coal fired plants can lift costs and prices. We maintain BUY with a target price of Rs 315.