Hindalco Industries Ltd. share price target

Revenue rose by 5.92% to Rs. 11681.1 Cr in Q4FY18 when compared to the previous quarter. Hindalco Industries Ltd Q4FY18 results Comment

Hindalco reported a steady Q4FY18 performance. Domestic operations reported a topline of | 11,681.1 crore (up 5.9% YoY, 6.0% QoQ) higher than our estimate of | 11,072.3 crore. The aluminium segment reported sales of ~321000 tonne (our estimate: ~330000 tonne) while copper sales were at ~108000 tonne (our estimate: ~105000 tonne) Reported EBITDA came in at | 1257.6 crore (down 6.7% YoY, 4.1% QoQ), broadly in line with our estimate of | 1267.5 crore. The resultant EBITDA margin was at 10.8% (vs. Q4FY17: 12.2%, Q3FY18: 11.9%,...

Hindalco standalone (S/A) EBITDA of INR12.6b (-4% QoQ) was 17% higher than estimate due to higher realization and lower-than-expected increase in cost in aluminum. EBITDA including Utkal increased 3% QoQ to INR16b, ahead of est. of INR15.2b on expansion in margin in aluminum. S/A PAT was down 22% QoQ to INR3.8b (est. INR2.7b) on lower other income and higher depreciation.

Revenue stood at Rs117bn (-0.6%/+6% yoy/qoq) in line with our estimates. Offtake of both aluminium and copper declined by 2%yoy and 5%yoy respectively. LME remain strong and rose by 20%yoy and 17%yoy for both aluminium and copper. EBITDA came in at Rs12.6bn (- 7%/-4% yoy/qoq) slightly lower than our estimate due to higher input cost of caustic soda and carbon products. Adjusted PAT came in at US$3.8bn...

We maintain buy on Hindalco (HNDL) and revise our TP higher to Rs350 (vs Rs315 earlier). HNDL's domestic aluminium business remains a solid operational performer despite adverse coal and carbon cost headwinds due to strong integration. Q4 performance was solid with aluminium business (incl. Utkal) delivering highest ever EBITDA of Rs12.7bn. Novelis' performance improved further with highest ever EBITDA/t of US$396 driven by higher automotive product sales. We like HNDL on account of i) strong earnings visibility from low cost aluminium asset base with low cost coal & bauxite supply in place, ii) increase in the EBITDA contribution from...

Strong 4QFY18 as expected: Novelis delivered its best-ever quarterly adj. EBITDA of USD319m (+9% YoY, +5% QoQ), driven by higher volumes, an improved product mix, operating efficiencies and favorable scrap spreads, partially offset by lower beverage can (BC) pricing. EBITDA/t increased 7% YoY (+3% QoQ) to USD396. INR44b debt reduction in FY18:Adj. EBITDA increased 12% YoY to USD1.2b. FCF rose 12% YoY to USD406m, which excludes USD314m from sale of stake in Korean rolling mill to Kobe Steel. Net debt declined by INR672m (~INR44b) YoY to USD3.6b, implying net debt/EBITDA of slightly less than 3x.

Minimal impact from US tariffs; earnings outlook intact We believe Novelis' earnings will see minimal impact from the 10% tariff imposition on aluminium by the United States of America. a) Exemption to key exporter Canada (51%) and b) significant recycling dependence (at over 50%) blunt any possible meaningful impact on Novelis. Duty imposition on Novelis' end products, namely auto and can sheets, further insulates the US market from dumping by other countries (ruling out competition to Novelis). Hindalco a) has worked its way to an advantageous point in coal security (80%+) at its India operations, b) is augmenting operations at Novelis further to look beyond the achieved...

Hindalco Industries' profit misses estimates as costs jump. Hindalco net sales rose 18% to Rs 11022.82 crore in Q3FY'18 compared to corresponding previous year period while net profit of the company rose 17% to Rs 375.54 crore. Operating margins of the company fell 80 bps to 11.9% leading to 11% rise in operating profits to Rs 1311.73 crore. Cost of material consumed as a percentage of net sales (net of stock adjustment) rose 160 bps to 60% while employee benefit expenses fell 10 bps to 4.3%. Power...

Hindalco reported a mix set of numbers for Q3FY18. The topline came in above our estimates, while the increased cost incidence impacted the EBITDA which came in lower than our estimates. Hindalco's domestic operations reported a topline of |11022.8 crore (up 18.4% YoY, 6.9% QoQ) higher than our estimates of |10654.6 crore. The standalone EBITDA of |1311.7 crore (up 10.7% YoY, down 5.6% QoQ), was lower than estimate of |1518.6 crore. The corresponding...

Where all other global and local aluminium companies are facing severe cost pressures, Hindalco is holding up on excellent cost management. Management has guided for modest 2-3% cost increase in Q4 over Q3. With plants running at full capacity, operational efficiencies are also helping.