Hindalco - Result Update - ICICI Securities

Hindalco's India business reported a healthy Q4FY20 performance wherein topline, EBITDA, PAT came in higher than our estimates. The better-than-expected performance was primarily driven by higher-than-expected sales volumes. The topline for Hindalco's India business was at Rs. 10014 crore (higher than our estimate of Rs. 9375.2 crore). The aluminium segment posted 314000 tonnes, higher than our estimate of 300000 tonnes while the copper segment reported sales volume of 86000 tonnes, higher than our estimate of 80000 tonnes. EBITDA for Hindalco's India business came in at Rs. 1455 crore (up 4% YoY, 12% QoQ, higher than our estimate of Rs. 1146.3 crore). EBITDA margin was at 14.5% (up 330 bps YoY, 180 bps QoQ), higher than our estimate of 12.2%. Ensuing PAT from the India business was at Rs. 379 crore (up 45% QoQ, higher than our estimate of Rs. 216 crore).

Valuation & Outlook

Hindalco reported a better-than-expected performance primarily on the back of higher-than-expected sales volumes and sequential lower cost of production (CoP) of aluminium (aluminium CoP fell 5% QoQ). Furthermore, ~Rs. 100 crore derivative gains aided copper segment EBITDA in Q4FY20. Going forward, in Q1FY21, CoP is likely to decline a further 5% on account of a decline in prices of key raw materials such as calcined petroleum coke, pitch, caustic soda, etc, auguring well for the company. We value the stock on an SOTP basis and arrive at a target price of Rs. 160. We maintain our HOLD recommendation on the stock.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Hindalco_Q4FY20.pdf

Shares of HINDALCO INDUSTRIES LTD. was last trading in BSE at Rs.145.8 as compared to the previous close of Rs. 146.1. The total number of shares traded during the day was 1373860 in over 11319 trades.

The stock hit an intraday high of Rs. 152.2 and intraday low of 143.8. The net turnover during the day was Rs. 202932542.

Source : Equity Bulls

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