Buy Hindalco Industries, target Rs 325: Edelweiss Financial Services
Buy Hindalco Industries Ltd at a price target of Rs 325.
By ETMarkets.com | Updated:
Edelweiss Financial Services has a buy call on Hindalco Industries Ltd. with a target price of Rs 325. The current market price of Hindalco Industries Ltd is Rs 237.9. 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 large-cap company with a market cap of Rs 53678.95 crore.
Investment rationale by Edelweiss
Novelis’ Q4FY18 adjusted EBITDA of USD319mn (up 9% YoY) came slightly ahead of estimate led by: 1) higher profitability in the US on sustained focus on value-added auto sales & operating leverage benefits in Latin America; and 2) better operating efficiencies resulting in raw material spread rising to a record of USD575/t. We are upbeat on sustenance of the earnings momentum as: a) contracts facilitate cost pass on despite current price volatility; and b) deleveraged balance sheet (net debt/EBITDA at 2.9x) will enable growth-oriented capex in auto. Maintain ‘BUY’ with TP of INR325, implying an exit multiple of ~7.0x FY20E EBITDA.
Outlook and valuations: On the growth track; maintain ‘BUY’We are upbeat on Novelis due to its focus on margin-accretive auto and specialty segments while maintaining fiscal prudence complemented by strong cash flow generation. Despite current price volatility, we believe quarterly EBITDA run rate of ~USD300-320mn is likely to be maintained. We maintain ‘BUY/SO’ with TP of INR325.
Hindalco Industries Ltd., incorporated in 1958, is a large-cap company with a market cap of Rs 53678.95 crore.
Investment rationale by Edelweiss
Novelis’ Q4FY18 adjusted EBITDA of USD319mn (up 9% YoY) came slightly ahead of estimate led by: 1) higher profitability in the US on sustained focus on value-added auto sales & operating leverage benefits in Latin America; and 2) better operating efficiencies resulting in raw material spread rising to a record of USD575/t. We are upbeat on sustenance of the earnings momentum as: a) contracts facilitate cost pass on despite current price volatility; and b) deleveraged balance sheet (net debt/EBITDA at 2.9x) will enable growth-oriented capex in auto. Maintain ‘BUY’ with TP of INR325, implying an exit multiple of ~7.0x FY20E EBITDA.
Outlook and valuations: On the growth track; maintain ‘BUY’We are upbeat on Novelis due to its focus on margin-accretive auto and specialty segments while maintaining fiscal prudence complemented by strong cash flow generation. Despite current price volatility, we believe quarterly EBITDA run rate of ~USD300-320mn is likely to be maintained. We maintain ‘BUY/SO’ with TP of INR325.
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