Accumulate Hindalco - Emkay

Hindalco Industries
Reco: ACCUMULATE
CMP: Rs126
Target Price: Rs154
Novelis holds the key

- Novelis to remain the key growth driver with an EBITDA of more than US$1 bn, largely immune to LME. Successful debt refinancing to address concerns on cons. balance sheet.

- First quartile unit cost of production of domestic aluminium business to ensure profitability even at tough times. Three-fold rise in aluminium capacities to aid volume growth.

- Higher share of value added products in aluminium segment (~50%) and strong by-product contribution in copper business would help mitigating commodity risk to a large extent.

-- Stability in Novelis with capex driven growth and attractive valuations should outplay short- term concerns; Initiate coverage with target price of Rs 154; Accumulate

Source : Equity Bulls

Keywords