Prabhudas Lilladher's research report on Hindalco Industries
Hindalco (HNDL) reported Q3FY21 EBITDA tad above our estimates due to better than expected earnings in Copper (CU) business. While, earnings in Aluminium (AL) operations fall short of expectation by 3% due to higher costs. Led by better visibility on profitability of Novelis’ legacy operations and increased synergies in Aleris, Novelis maintained guidance on sustainable EBITDA margin at US$480-500/t. Underpinned by strong profitability across the segments except Aerospace, management would meet its guidance of Net debt/EBITDA<3x (Q3FY21: 3.3x) earlier than targeted timeline of FY23e. In Indian operations (with share reducing to 30% in consolidated EBITDA), quarterly EBITDA run-rate stabilised at Rs15bn (v/s12.5bn last year) on back of strong LME and measured cost increase.
Outlook
Driven by strong earnings outlook and comfortable B/S, we reiterate BUY with TP of Rs305, EV/EBITDA of 6x FY22e.
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