Brokerages Cut Hindalco’s Target Price After Q3 Results, But Retain Ratings
Net profit of the company fell 21.9 percent year-on-year to Rs 193 crore in the October-December period—in line with the Rs 193-crore consensus estimate of analysts tracked by Bloomberg. The numbers, however, don’t include earnings from subsidiaries Utkal Alumina International Ltd. and Novelis Inc.
The downside on a consolidated level was limited due to strong Novelis business despite a seasonally weak quarter, brokerages said.
Here’s what brokerages made of Hindalco’s third-quarter earnings:
- Maintain ‘Buy’; target price cut to Rs 255 versus Rs 260 earlier.
- Upstream aluminium surprises despite price headwinds.
- Aluminium drives Ebitda beat with 5 percent quarter-on-quarter cost decline.
- Cost decline led by improved proportion of linkage coal, lower carbon costs.
- Lower treatment and refining charges to impact copper business.
- Cut FY21-22 earnings per share by 8-9 percent.
- Maintain ‘Overweight’; target price at Rs 270.
- In line quarter, attractive balance sheet and downstream business.
- Aleris completion key catalyst.
- Novelis reports strong results even during a seasonally weak quarter.
- Valuations at 5.2x enterprise value/Ebitda substantially below mid-cycle levels.
- Valuation doesn’t reflect the balance sheet strength.
- Maintain ‘Buy’ rating; target price cut by 4 percent to Rs 230 per share, potential upside of 18.1 percent..
- Consolidated Ebitda fell 13 percent year-on-year on weakness in India..
- EC’s approval for Aleris’ duffel plant the only pending item to transaction.
- Limited downside given 70 percent of Ebitda comes from Novelis.
- Maintain ‘Accumulate’; cut target price to Rs 225 from Rs 230.
- Aluminium operation’s profitability to continue to improve on lower cost of production.
- Copper operations’ earnings would remain under pressure in FY21 due to over 20 percent fall in treatment and refining margin.
- Lower hedging gains to further weaken earnings in FY21.
- Reiterate ‘Buy’ rating; TP of Rs 240, potential upside of 24 percent.
- Its low-cost integrated production well placed to benefit from recovery in the London Metal Index.
- Novelis’ performance remains robust, with strong spreads.