EUR 120.00 For Business Accounts Only

MOSL: Morning India (13/February/19): 1. Hindalco Inds (Operationally in line); 2. Coal India (Gaining from price hike); 3. Sun Pharma; 4. Container Corp; 5. Oil India; 6. Indian Hotels; 7. Fund Folio (Equity A

MOrning India (13/February/19): 1. Hindalco Inds (Operationally in line); 2. Coal India (Gaining from price hike); 3. Sun Pharma; 4. Container Corp; 5. Oil India; 6. Indian Hotels; 7. Fund Folio (Equity AUM consolidates in Jan’19); 8. EcoScope

 

Today’s top research idea

Hindalco: Operationally in line; Input costs appear to have peaked; Valuations attractive; Maintain Buy

• 3QFY19 EBITDA of INR17.2b (-1% QoQ) came in 5% higher than our estimate of INR16.7b owing to the better-than-expected copper business performance. Finance cost was flat QoQ at INR4.8b, while other income increased 13% QoQ to INR2.1b. PAT declined 2% QoQ to INR7.1b (consol. PAT up by 45% YoY to INR46b YTD).
• We raise our FY19/20 EPS estimates by 3%/4% to factor in higher other income and hedging gains. Despite upgrade to earnings, we cut our TP to INR302 (prior: INR338) due to reducing EV/EBITDA valuation multiple from 6.5x to 6x, given the general de-rating of metal stocks and accounting for the INR6.5b outgo on the rights issue of Idea. The stock trades at attractive valuations of 5.1x EV/EBITDA and 6.8x P/E on FY20E. Maintain Buy.

Piping hot news

CPI inflation hits 19-month low at 2.05% in January; factory production at 2.4% in December

• Consumer Price Index (CPI) inflation eased to 2.05 per cent in January, the lowest level since June 2017, government data showed on Monday. The CPI inflation was recorded at 2.19 percent in December 2018. On the other hand, factory output or Index of Industrial Production (IIP) rose to 2.4 per cent in December as against just 0.5 per cent growth rate in November. A Reuters poll of 30 economists predicted consumer price inflation (CPI) to have accelerated to 2.48 percent in January, from 2.19 percent in December.