MOSL: Morning India (17/May/18): 1. Fund Folio (Indian Mutual Fund Tracker); 2. ITC; 3. JSW Steel; 4. Tata Steel; 5. Hindalco Inds; 6. TVS Motor Co; 7. Endurance Tech; 8. Crompton Gr. Con
MOrning India (17/May/18): 1. Fund Folio (Indian Mutual Fund Tracker); 2. ITC; 3. JSW Steel; 4. Tata Steel; 5. Hindalco Inds; 6. TVS Motor Co; 7. Endurance Tech; 8. Crompton Gr. Con
Today’s top research idea
Hindalco: Margin expansion in aluminum drives beat; FCF generation to continue even after Capex step up on high IRR projects
- Hindalco maintains its focus on high IRR projects i.e. expansion of Utkal Alumina and downstream projects in India and autolines at Novelis. Despite step up in capex to INR47b, we expect Hindalco to generate FCF. We value the stock at INR371/share based on 6.5xEV/EBITDA, value for CWIP at book and investments at 20% discount. Stock is trading at attractive valuations of 5.4xEV/EBITDA on FY20E. Maintain BUY
- Aluminum CoP has peaked, while realization is expected to improve on higher LME. Copper production will be impacted in 1Q due to maintenance shutdown, but the outlook is positive with increase in sulfuric acid and DAP prices.
- Hindalco standalone (S/A) EBITDA of INR12.6b (-4% QoQ) was 17% higher than estimate due to higher realization and lower-than-expected increase in cost in aluminum. EBITDA including Utkal increased 3% QoQ to INR16b, ahead of est. of INR15.2b on expansion in margin in aluminum. S/A PAT was down 22% QoQ to INR3.8b (est. INR2.7b) on lower other income and higher depreciation.
Piping hot news
Rupee bounces back from 15-month low of 68.11 a dollar on RBI intervention
- The rupee recovered smartly on Wednesday from the 15-month low reached a day before, as the Reserve Bank of India (RBI) stepped in with heavy dollar sales.
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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