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    Buy Hindalco Industries, target price Rs 473: Centrum Broking

    Synopsis

    Hindalco Industries Ltd., incorporated in the year 1958, is a Large Cap company (having a market cap of Rs 71370.21 Crore) operating in Metals - Non Ferrous sector.

    Hindalco IndustriesAgencies
    Promoters held 34.64 per cent stake in the company as of 31-Mar-2022, while FIIs owned 28.85 per cent, DIIs 19.22 per cent.
    Centrum Broking has buy call on Hindalco Industries with a target price of Rs 473. The current market price of Hindalco Industries Ltd. is Rs 320. Time period given by analyst is one year when Hindalco Industries Ltd. price can reach defined target.

    Hindalco Industries Ltd., incorporated in the year 1958, is a Large Cap company (having a market cap of Rs 71370.21 Crore) operating in Metals - Non Ferrous sector.

    Hindalco Industries Ltd. key Products/Revenue Segments include Copper/Copper Products, Aluminium, Other Operating Revenue, Sale of services for the year ending 31-Mar-2021.


    Financials
    For the quarter ended 31-03-2022, the company has reported a Consolidated Total Income of Rs 56057.00 Crore, up 11.11 % from last quarter Total Income of Rs 50453.00 Crore and up 37.75 % from last year same quarter Total Income of Rs 40696.00 Crore. Company has reported net profit after tax of Rs 3850.00 Crore in latest quarter.
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    Investment Rationale
    Hindalco (HNDL IN)’s share price has fallen ~50% from its peak of March 2022 with investors having concern on its huge capex plans coinciding with falling aluminum prices and possibilities of earnings hit of Novelis amid recessionary fear in developed economies like US and Europe. The brokerage believe that the stock has factored in pessimism and market failed to single out the companies like HNDL whose earnings are relatively less susceptible to commodity prices and ~60% of EBITDA comes from conversion business which is intact. We believe that fundamentals of aluminum are robust and there should not be any major fall from current price of USD 2,500/t. However, with China increasing exports, global deficit may reduce and accordingly, it cuts average LME aluminium prices to USD 2,600/t in FY23E and USD2,400/t in FY24E, leading to 3%/6% cut in FY23E/FY24E EBITDA. With earnings cut and lower valuation multiple, we reduce our target price to Rs473 (earlier Rs573), valuing Novelis at 6.0x FY24E EV/EBITDA and Indian operations at 4.0x FY24E EV/EBITDA. At CMP, the stock is trading at 4.0x FY24E EV/EBITDA, which is near to a decade low. Reiterate BUY.

    Promoter/FII Holdings
    Promoters held 34.64 per cent stake in the company as of 31-Mar-2022, while FIIs owned 28.85 per cent, DIIs 19.22 per cent.



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    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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