ICICI Direct has given Hold recommendation for Hindalco with a target price of Rs. 309 in its research report issued on Feb 15, 2021
ICICI Direct’s research report on Hindalco
Hindalco reported a healthy Q3FY21 performance. Topline of the India business came in at Rs 11425 crore (up 11% YoY, 19% QoQ). For Q3FY21, aluminium segment of the India business posted sales volume of 315000 tonnes (our estimate: 319000 tonnes), while copper segment reported sales volume of 73000 tonnes (our estimate: 73000 tonnes). EBITDA of the India business came in at Rs 1528 crore, higher than our estimate of Rs 1413 crore. Ensuing PAT of Hindalco’s India business was at Rs 495 crore, higher than our estimate of Rs 358 crore. For the quarter, Hindalco’s wholly owned subsidiary Novelis also reported a robust performance. Total flat rolled product shipments of Novelis were at 933 KT, higher than our estimate of 925 KT. Novelis’ adjusted EBITDA per tonne was at US$537/tonne, higher than our estimate of US$490/tonne.
We value the stock on a SoTP basis and arrive at a target price of Rs 309 (earlier Rs 240). On the back of the recent run-up witnessed in the stock, we downgrade the stock from BUY to HOLD.