Hindalco share price jumped by 4.5% robust earnings in the April-June quarter 4.5 per cent to Rs 432.95 per share on the BSE intraday during Thursday’s session after the company's US-based subsidiary Novelis reported robust earnings in the April-June quarter of the financial year 2022-23 (Q1FY23). The stock has been a top gainer on the Nifty50 index today. 

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Hindalco subsidiary Novelis’ 1QFY23 adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) was much ahead of several brokerages' estimates led by a sharp recovery in margins in North America mainly due to an improvement in semiconductor supplies. 

The management highlighted that they have now hedged around 80/50 per cent of its FY23/FY24 energy needs in Europe and is currently in a comfortable position to raise its profitability guidance further. It said, a broad, stable product portfolio capitalizing on solid demand across end markets. 

Motilal Oswal has marginally raised FY23 estimates for Novelis, given its strong performance in Q1, and reduced FY23 volume estimate marginally by 1 per cent to 3.96mt as against 4mt earlier, but raised EBITDA/t by 4 per cent, resulting in a 3 per cent improvement in EBITDA to Rs 165 billion. 

Novelis continues to enjoy a strong leadership position in the secondary aluminum business, the brokerage said, adding that the company is well poised to reap the benefits from its organic expansion with around 58% sales in can sheets, and automotive demand recovering. 

Motilal Oswal marginally raised the target price to Rs 490 from Rs 475 per share (18% upside), while maintaining a Buy rating. The stock is trading at n FY23E/FY24E EV/EBITDA of 5.3x/5.1x and available at 1.3x FY23E P/B, while offering an attractive RoE of 18%. 

Kotak Institutional Equities cut EBITDA estimates by 1% for FY2023/24E mainly led by lower margins in India, largely offset by strong earnings at Novelis. It raised Hindalco’s target to Rs 550 from Rs 540 apiece earlier (33% upside) and maintained a Buy stance on attractive valuations at 4.7X EV/EBITDA. 

The company continues to witness stable demand for sustainable aluminium solutions, given the positive demand outlook across end-user segments, JM Financial said, adding that it awaits Hindalco consolidated numbers (10th Aug. 2022) to revisit estimates.  

Hindalco remains the preferred play in the metal space, the brokerage said reiterating a Buy stance with a target price of Rs 515 per share, which implies an upside of over 24 per cent.