MOSL: HINDALCO (Buy)-Copper business drives strong performance-Net debt to EBITDA at ~3x, deleveraging remains focus
​Hindalco: Copper business drives strong performance; Net debt to EBITDA at ~3x, deleveraging remains focus; Reiterate Buy
(HNDL IN, Mkt Cap USD5.7b, CMP INR203, TP INR250, 23% Upside, Buy)
- Standalone EBITDA grew 16% YoY (+14% QoQ) to INR13.5b (est. of INR12.9b), led by higher copper volumes and aluminum LME. Interest cost fell 6% YoY to INR5.4b. Adj. PAT grew 24% YoY to INR4.7b (est. of INR4.1b). HNDL has pre-paid debt of INR55b by April 2017, as against capital raise of INR33b through QIP. For FY17, EBITDA grew 45% YoY to INR48b and adj. PAT more than doubled YoY to INR14.9b. Consol. EBITDA (adjusted for exceptionals at Novelis) was up by 33% YoY to ~INR141b and adj. PAT by 45% YoY to ~INR36b in FY17.
Copper: Higher volumes, better by-product realization drive strong performance
- Sales grew 18% YoY/QoQ to 114kt on strong demand and weak base. EBITDA was up 23% YoY to INR4.9b, aided by higher by-product realization.
Aluminum: Higher cost and lower realization offset LME gains
- Sales were flat YoY (+6% QoQ) at 328kt. EBITDA including Utkal grew 27% YoY/12% QoQ to INR11.2b. EBITDA/t was up USD32 QoQ to USD508, lower than the rise in LME of ~USD130, due to hedging impact and input costs.
Hindalco Industries is engaged in the production and sale of aluminum and copper in India and internationally. Co.'s aluminum products include rolled products, extrusions, foils, primary aluminum ingots, billets, wire rods, and aluminum slabs; and aluminum chemicals, such as standard alumina, standard hydrate and specialty aluminas and hydrates for use in refractories, ceramics, fire retardant plastics, alum, and zeolite applications. Co. also offers aluminum foil and packaging solutions to pharmaceuticals, healthcare, dairy, confectionery, processed foods, personal products, and tobacco industries, as well as to the heat, ventilation, and air conditioning industries.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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