Brokerages reiterate bullish bets on Hindalco shares after Q1 results; Should you buy?
3 min read 09 Aug 2023, 11:42 AM ISTOn a consolidated basis, Hindalco Industries' net profit fell 40.4% on-year to ₹2,454 crore, while revenue from operations declined nearly 9% YoY to ₹52,991 crore.
PremiumHindalco Industries share price gained nearly a percent in the early trade on Wednesday, after the company’s Q1 results largely met analysts’ estimates. Hindalco shares gained as much as 0.71% in the early trade, but soon gave up gains to trade marginally lower.
The Aditya Birla Group flagship company reported a standalone net profit of ₹600 crore for the quarter ended June 2023, a fall of 58.6% from ₹1,448 crore in the year-ago quarter.
The aluminium major’s standalone revenue from operations in Q1FY24 increased 2% to ₹19,904 crore from ₹19,518 crore, YoY.
On a consolidated basis, Hindalco Industries' net profit fell 40.4% on-year to ₹2,454 crore, while revenue from operations declined nearly 9% YoY to ₹52,991 crore.
However, Hindalco Q1 results were largely in-line or above most analysts’ estimates.
Read here: Hindalco Industries Q1 Results: Standalone net profit drops 58% to ₹600 crore; revenue rises 2% YoY
At the operating level, the company saw better price/mix improvement, better downstream aluminum performance, lower input costs, lower energy costs and other expenses during the quarter, analysts said.
Here’s what brokerages have to say on Hindalco Q1 results and Hindalco share price:
Motilal Oswal Financial Services
Motilal Oswal Financial Services believes that Hindalco Industries reflects strongly on long-term opportunities and remains confident on the company’s ability considering its leadership position in both beverages can and automotive markets.
Considering robust domestic demand aided by higher demand from EV and consumer durables, higher spend on infrastructure and construction and higher public and private sector capex, we have raised our FY25E EBITDA/ APAT by 4%/10%, Motilal Oswal said.
The brokerage reiterated its “Buy’ rating on the stock with an SoTP-based target price of ₹550 per share, indicating an upside of 20% from Wednesday’s high price.
Nuvama Institutional Equities
Nuvama Institutional Equities expects Hindalco Industries’ Q2FY24 EBITDA to remain under pressure due to softer volumes and prices, partially offset by lower cost of production. It expects Novelis’s earnings should improve in H2FY24 with beverage cans demand normalising.
The brokerage maintained a ‘Hold’ rating on the stock with a target price of ₹492 per share, valuing India business at 5x and Novelis at 6x FY25 EV/EBITDA.
Antique Stock Broking
Hindalco Industries’ Q1 results were in-line with the brokerage’s estimates and it expects the recovery in Novelis’ business to continue going ahead.
Antique Stock Broking believes improved copper segment performance, better aluminum operations, lower coal costs and improvement in Novelis’ operations would aid Hindalco Industries’ profitability.
It maintained a ‘Buy’ rating on the stock with a SoTP-based target price of ₹526 per share at an implied FY25E EV/EBITDA multiple of 5.9x.
Also Read: Coal India share price rises 2% after Q1 results; should you buy the stock?
JM Financial
JM Financial is of the view that the long term outlook for Hindalco continues to remain buoyant given a) Novelis – remains confident of achieving its medium term EBITDA/t guidance of ~$525 b) resilient performance by India aluminium operations c) enhanced coal security post acquisition of Meenakshi, Meenakshi west and Chakla coal mines and d) growth capex to augment capacity in downstream business.
Hindalco, given ~70%+ steady or strong EBITDA being non-LME linked, remains our preferred play in the metal space, JM Financial said.
The brokerage firm reiterated its ‘Buy’ call on the stock and raised the target price to ₹550 per share from ₹540 earlier.
Hindalco share price has risen 7% in one month, while it has fallen over 4% YTD.
At 11:40 am, Hindalco Industries share price was trading 0.53% lower at ₹452.65 apiece on the BSE.
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Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
