Hindalco Industries Ltd. share price target

5 February 2019 Novelis continues reporting a robust operating performance. Adj. EBITDA increased 6% YoY to USD322m, led by strong demand across product segments, operating efficiencies and favorable recycling spreads, partially offset by some temporary headwinds in autos (China and the UK) and a transport strike. USD2.3b funding has been arranged for the Aleris acquisition. USD23m in 3Q (after USD96m capex) and USD127m in 9MFY19 (after USD210m capex and USD360m WC increase). Barring the temporary pull-back in the auto market in the UK and China, the earnings outlook remains robust on the back of tightening in the beverage can market and operating efficiencies. Despite tapering of recycling spreads, management guided for robust EBITDA/t of USD400, which is still 3% better than our FY20 estimate. Aleris acquisition is strategic and value accretive, in our view, and it too will be FCF positive at margin.

Standalone Hindalco EBITDA came in at | 1090.7 crore (down 21.5% Quarterly Performance (Standalone) YoY, 17.7% QoQ), marginally lower than our estimate of | 1130.4 Q2FY19 Q2FY18 YoY (%) Q1FY19 QoQ (%)...

2 November 2018 Hindalcos (HNDL) NSU (Novelis + SA + Utkal) EBITDA increased 4% QoQ (+19% YoY) to INR41.7b, led by the continuously improving operating performance of Novelis and the strong performance of copper smelter, partially offset by the Indian aluminum business. Adjusted NSU PAT grew 6% QoQ (+61% YoY) to INR17b. EBITDA of the Indian business (SA + Utkal) declined 6% QoQ (+8% YoY) to INR17.5b due to lower LME and higher CoP for aluminum. Despite the 33-day maintenance shutdown, copper EBITDA grew 16% QoQ to INR3.9b, led by stronger prices of by-products (sulfuric acid, DAP, etc.) and VAP premiums. Adj. EBITDA increased 7% QoQ (+18% YoY) to USD355m, while EBITDA per ton grew 6% QoQ (+17% YoY) to USD440, driven by a better product mix and favorable recycling spreads (between metal and scrap prices). Tailwind of recycling spreads may not sustain for long, yet EBITDA per ton of USD400/t is sustainable.

We maintain buy on Hindalco (HNDL) with a TP of Rs340. HNDL's domestic aluminium business beat expectations again despite cost pressures (blended EBITDA/t at US$597 on Utkal inclusive basis) led by industry leading cost positioning and optimum utilisations. Novelis' performance was best ever (EBITDA/t at US$440) and guidance was strong. We like HNDL on account of i) strong earnings visibility from low cost domestic aluminium asset base, ii) increasing proportion of value added downstream conversion business EBITDA share in consolidated entity with acquisition of Aleris and increasing automotive share at Novelis, iii) high FCF...

Hindalco posts 43% jump in Q1 profit, misses market estimates. Hindalco net sales rose 8% to Rs 10593.21 crore in Q1FY'19 compared to corresponding previous year period while net profit of the company rose 43% to Rs 413.53 crore. Operating margins of the company rose 70 bps to 12.5% leading to 15% rise in operating profits to Rs 1325.28 crore. Cost of material consumed as a percentage of net sales (net of stock adjustment) rose 70 bps to 58.9% while employee benefit expenses fell 20 bps to 4.2%. Power and fuel expenses were down 130 bps to 13.5% and other expenses increased 40 bps to 11.5%. Other income fell 59% to Rs 105.47 crore. PBDIT increased 2% to Rs 1430.75 crore....

ICICI Securities Ltd | Retail Equity Research Hindalco reported a healthy Q1FY19 performance wherein the topline, EBITDA and PAT came in higher than our estimates. Domestic operations reported a topline of | 10593 crore (up 8.4% YoY, down 9.3% QoQ) higher than our estimate of | 8966.4 crore. Aluminium segment reported sales of ~300000 tonne (vs. our estimate of...

of INR16.7b) led by higher aluminum prices, while cost of production (CoP) was flat QoQ. Finance cost declined 7% QoQ to INR4.6b due to upgrade in credit rating and reset of interest rates. PAT increased 19% QoQ to INR7.3b. Aluminum EBITDA/t rose 23% QoQ to USD759 (est. of USD628), led by higher LME (+USD88) and product premium (+USD28), while sales declined 7% QoQ (unchanged YoY) to 300kt (23kt inventory increase). Aluminum CoP was flat QoQ, despite higher coal (+2% QoQ) and oil (+2% QoQ) prices in 1Q, due to lower fixed cost, but it is likely to increase 3-4% in 2Q. Copper sales declined 24% QoQ to 82kt due to maintenance shutdown, but EBITDA/lb was up 24% QoQ to US cents 26.9 on higher by-product prices. EBITDA was down 3% QoQ (+9% YoY) to INR3.25b.

Novelis adjusted EBITDA/ tonne (rolled product) came in at US$417/tn (+13% /+5% YoY/ QoQ). FRP shipment stood at 797 kt, impacted by disruption in North America and South America. Focus remains on automotive segment which continues to be promising Strong performance in standalone and Novelis has been helpful. We have revised our estimates as we have included Utkal in our standalone estimates. Maintain BUY with a...

We maintain buy on Hindalco (HNDL) with a revised TP of Rs340. HNDL's domestic aluminium business continued to deliver a solid operational performance (Blended EBITDA/t at US$762 on Utkal inclusive basis) led by industry leading cost positioning and optimum utilisations. Novelis' performance remained solid (EBITDA/t at US$417) and Aleris (acquisition underway) also performed strongly with EBITDA/t of US$361. We like HNDL on account of i) strong earnings visibility from low cost domestic aluminium asset base with domestic coal supply in place, ii) increasing proportion of non-commodity linked EBITDA share in consolidated entity...

ICICI Securities Ltd | Retail Equity Research Hindalco's wholly-owned subsidiary, Novelis has signed a definitive agreement to purchase Aleris Corporation, a global aluminium rolled products major head quartered in the United States for US$2.58 billion in a debt finance deal. Aleris has a global footprint with 13 manufacturing facilities across the US, Europe and Asia. The acquisition makes Hindalco...