Hindalco Industries Ltd. share price target

Aluminum CoP is likely to increase further by USD20-25/t on input cost pressure. HNDL SA now has 28% of FY19 volumes hedged at higher price of USD2,200/t (v/s USD2,000 in FY18). Spend on high-IRR projects (e.g., Utkal Alumina and VAP) is picking up. We are adjusting our model for higher capex of INR53b (v/s INR28b) in FY19 to factor in the announced investments in Novel is and India. This will drive earnings in FY21. Therefore, we are adding book value of CWIP to SOTP and roll over to FY20E. EPS has increased by 5-6% on lower tax rate in the US. Stock is trading at attractive EV/EBITDA of 5.8xFY20E. Net debt/EBITDA ratio has declined to 2.8x in FY18 (from 6.4 in FY16). After de-risking balance sheet, Hindalco is now investing in high-IRR projects to drive growth. Maintain Buy.

South America reported very strong 17% YoY growth in volumes. This, coupled with operating leverage, led to EBITDA growth of 32% YoY to USD107m. EBITDA/t improved in Asia too on a higher share of auto from China plant. North America's EBITDA/t was stable, while volumes grew 9% YoY. Europe benefitted from a stronger EUR

Standalone revenue increased by 5.5% QoQ in Q2FY18 led by higher aluminium volumes and improvement in both aluminium & copper realisations. EBITDA grew impressively by 21% QoQ with 174bps improvement in EBITDA...

Q2FY18 standalone EBITDA at Rs 13.9 bn (up 20% YoY) was in line with our and consensus estimates due to (a) higher LME prices and (b) strong profitability in copper business.

On a standalone basis, Hindalco reported a steady set of Q2FY18 numbers wherein the topline and EBITDA came broadly in line with our estimates. The company reported exceptional items (expense) due to which the PAT was lower than our estimates For Q2FY18, the aluminium metal production was at 326 kilotonne (KT) while sales volumes were at ~329 KT (in line with our estimate of ~330 KT). The copper segment reported cathode production of 96 KT while sales volumes were at ~93 KT (our estimate of ~100 KT)...

Hindalco Industries Ltd.'s profit declined for the second straight quarter due to a one-time loss, but matched estimates. Hindalco attained revenues of Rs. 10308 crore, higher as compared to Q2 FY2017, led by aluminium volumes and improved realization across both the segments. EBITDA (Earnings before Interest, Tax, Depreciation and Amortisation) for the quarter was Rs. 1577 crore, up by 6 percent compared to the previous year, on account of higher aluminium volumes and supportive macro factors, partly offset by higher input costs and lower volumes in copper segment. Depreciation rose by 8 percent Y-o-Y, due to progressive capitalization. Interest expense for the...

Strong Quarter; Valuation Continues to Remain Pricey Novelis' adjusted EBITDA rose by 12% YoY to US$302mn aided by higher value-added automobile sheet shipment volume, operational efficiencies and better product-mix. Automotive shipments grew by 12% YoY and beverage can shipments grew by 5% YoY. Novelis has raised its adjusted...

Hindalco's (HNDL) 2QFY18 standalone (S/A) EBITDA increased 20% YoY to INR13.9b (in line with our estimate), driven by margin expansion in both copper (Cu) and aluminum (AL) segments. Utkal Alumina's (100% subsidiary) EBITDA too increased by 18% to INR2b. Thus, total EBITDA of Indian (S/A+Utkal) increased 20% YoY to INR15.9b. There were EO items of INR1b toward mining, DMF, etc. Adj. PAT...

We maintain buy on Hindalco (HNDL) and revise our TP to Rs315 (vs Rs250 Earlier). HNDL's domestic aluminium business remains a solid operational performer despite adverse coal and carbon cost headwinds (EBITDA/t at US$452). Utkal's EBITDA was the strong at Rs2bn while Novelis' performance improved further (EBITDA/t at US$377). 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 Novelis with strong guidance, iii) strong capex discipline resulting in high FCF generation, and iv) accelerated reduction in net debt/EBITDA...

EBITDA guidance raised; raising target price; Reiterate Buy Novelis reported the historically best quarter, as adj. EBITDA grew 12% YoY to USD302m (7% beat) in 2QFY18, driven by higher volumes and margins. After a long time, beverage can volumes have started growing in North America. Interest cost declined 22% YoY to USD62m on refinancing of debt a few quarters ago. Adj. PAT increased 12x YoY to USD83m. FCF came in strong at USD101m, despite working capital increase on higher LME. Novelis received USD314m from Kobe Steel toward Ulsan JV. Net debt/EBITDA is now at 3.5x....