Hindalco Q1 Review - Higher LME Prices To Drive Earnings Growth: Motilal Oswal
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Motilal Oswal Report
Hindalco Industries Ltd.’s Q1 FY22 result for the India business was strong, as expected, with Ebitda up 29% QoQ to Rs 24.3 billion on higher London Metal Exchange prices.
Consolidated net debt increased by Rs 45 billion QoQ to Rs 519 billion, and net debt/Ebitda declined to 2.36 times (versus a peak of four times after the Aleris acquisition).
We maintain our estimates and reiterate Hindalco as our top non-ferrous pick.
Despite rising costs, we estimate India Ebitda/tonne in FY22E to be the highest ever in the last 10 years at $959/tonne.
We expect 43% earnings per share compound annual growth rate over FY21-23E, led by stronger LME price and lower interest cost from deleveraging.
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