MOSL: HINDALCO (Buy)-Aluminum business exceeds expectations; Valuations attractive
Hindalco: Aluminum business exceeds expectations; Valuations attractive, Maintain Buy
(HNDL IN, Mkt Cap USD7.3b, CMP INR222, TP INR331, 49% Upside, Buy)
Hindalco India (Standalone + Utkal): 1QFY19 EBITDA increased 15% QoQ to INR18.4b (est. of INR16.7b) led by higher aluminum prices, while cost of production (CoP) was flat QoQ. Finance cost declined 7% QoQ to INR4.6b due to upgrade in credit rating and reset of interest rates. PAT increased 19% QoQ to INR7.3b.
- Aluminum EBITDA/t rose 23% QoQ to USD759 (est. of USD628), led by higher LME (+USD88) and product premium (+USD28), while sales declined 7% QoQ (unchanged YoY) to 300kt (23kt inventory increase).
- Aluminum CoP was flat QoQ, despite higher coal (+2% QoQ) and oil (+2% QoQ) prices in 1Q, due to lower fixed cost, but it is likely to increase 3-4% in 2Q.
- Copper sales declined 24% QoQ to 82kt due to maintenance shutdown, but EBITDA/lb was up 24% QoQ to US cents 26.9 on higher by-product prices. EBITDA was down 3% QoQ (+9% YoY) to INR3.25b.
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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