Hindalco Industries Ltd. share price target

As per media reports, Hindalco is considering acquisition of US-based aluminium rolled product producer Aleris Corporation for USD 3 bn valuation.

In Non-ferrous space: Zinc and Lead rose by 2% mom and 6% mom, respectively whereas Copper fell by 4% mom. Aluminium prices remained flat at US$2111/tonne. Silver and Gold witnessed trend reversal and fell by 6% mom and 3% mom, respectively. One Belt One Road to create demand for 150mt steel, enough to keep China's steel mills rolling for next 10 years at the current rate of production, as per a study by BHP. This, along with China's war on pollution has kept steel prices sentimentally positive. In India, on the contrary, steel prices for both flat and long products fell by 6% mom and 4% mom while Iron Ore prices remained stable. We continue to prefer Non-ferrous...

On a standalone basis, Hindalco's aluminium business reported a steady topline performance for Q1FY18. Plants continued to operate at their designed capacity aiding 15% YoY growth in value added products. However, the performance of the copper division was impacted by lower by-product realisations Gross revenues for Q1FY18 were at | 10407.04 crore. Revenues from aluminium segment grew ~17% YoY to | 5008 crore while revenues from copper segment were at | 5403 crore, up 62% YoY. After...

We believe that the stock has run ahead of fundamentals while outperforming its global peers. Further, the current stock price doesn't capture LME price risk, and also the overall cost is likely to head northwards. However, persistent and widening deficit in global markets (ex-China) on the back of strong demand growth and limited new supplies continues to deplete inventories and could aid a rally in aluminium prices thus posing a risk to our call. At CMP, the stock trades at 8xFY19E EV/EBITDA. We maintain our REDUCE recommendation on the stock with an...

In Ferrous space, steel CIS price remained subdued and rose marginally by 1.1% MoM to US$440/tn. On the other hand, prices of Iron Ore and China HR Sheet rallied by +17% MoM and +10% MoM, respectively due to better-than-expected demand from China. Post the cyclone, as expected, Coking Coal price remained rangebound and grew by 0.2% to US$150/tonne. We don't' expect any significant change in Coking Coal prices at least till H1FY18. China PMI improved to 51.7 in June'17 from 51.2 in May'17. In Non-ferrous metals, Zinc, Lead and Copper rallied by 8% MoM, 9% MoM and 5% MoM, respectively to US$2754/tn, US$2274/tn and US$5908/tn, whereas Aluminium declined by...

Steady operations going on in aluminium smelters, refineries and copper plant as well. Most of the operating leverage related improvement has been factored in already. The focus is now on the ramping up of downstream VAP capacity in both metals No major capex is likely to be spent and the company expects Rs 60 bn total capex for next five years including the Utkal refinery expansion from 1.5 mtpa to 2 mtpa, downstream facility ramp up and maintenance. Coal integration to be better growth is expected, but product mix improvement will continue. US and Europe are likely to do better. While, Asia is likely to remain steady, Brazil stays a concern in the near term...

Q4FY17 standalone EBITDA at Rs 13.5 bn (up 16% YoY) was in line with our estimateon better volumes and high LME prices.

Revenue grew by 18.39% to Rs. 11026.09 Cr in Q4FY17 when compared to the previous quarter.

In-line quarter; Valuation Continues to Remain Pricey Hindalco Industries has delivered an in-line performance in 4QFY17 with its standalone operating profit growing by 14.4% YoY and 13.7% QoQ to Rs13.5bn (vs. our estimate of Rs12.2bn). Revenue from Aluminium segment increased by 9.4% YoY and 12.8% QoQ led by higher sales volume. However, segmental EBIT margin declined by 126bps QoQ (flat on YoY basis) to 16.5%, after hitting a multi-year high of 17.8% in 3QFY17 largely due to stabilization of new smelters and higher volume. Copper revenue rose by 47.9% YoY (+24% QoQ) due to 25% YoY and 10.5% QoQ rise in LME copper prices and 19.4% YoY and 18.1% QoQ rise in volume to 1.11 lakh tonne. Notably, the...