Brokerage house JM Financial has maintained its ‘Hold’ rating on Hindalco Industries after the firm met the company’s management. JM Financial retained its negative bias on the stock citing delay in clearances of the Mahan coal block and sees full coal availability in 2-3 years. The firm has set a price target of Rs 105 per share.
Source: JM Financial report
| Key Takeaways From The Management Meet |
| Trial production starts at Utkal alumina; FY14 guidance of 400ktons; synergies can be better tapped when Aditya smelter gets commissioned |
| Mahan coal block awaits clearances; full coal availability 2-3 years away in our opinion |
| Aditya smelter will contribute meaningfully only in FY15E; low visibility on MNH Shakti coal block as of now |
| Hindalco does not have the requisite permissions to sell power in case of interim surplus |
| Capitalization of Rs 5000 crore each towards Utkal and Mahan expected in 2HFY14. |
Y/E March
|
FY11A
|
FY12A
|
FY13E
|
FY14E
|
FY15E
|
Net sales
|
718,008
|
803,931
|
801,928
|
874,004
|
949,211
|
Sales growth (%)
|
18.6
|
12
|
-0.2
|
9
|
8.6
|
EBITDA
|
79,449
|
76,369
|
78,368
|
94,652
|
107,870
|
EBITDA (%)
|
11
|
9.4
|
9.7
|
10.8
|
11.4
|
Adj Net Profit
|
23,996
|
28,444
|
30,269
|
21,265
|
22,801
|
EPS (Rs)
|
12.5
|
14.9
|
15.8
|
11.1
|
11.9
|
EPS growth (%)
|
-13.3
|
18.5
|
6.4
|
-29.7
|
7.2
|
ROCE (%)
|
7.8
|
6.9
|
5.8
|
4.6
|
5.2
|
ROE (%)
|
9.5
|
9.3
|
9
|
5.8
|
5.8
|
PE (x)
|
8.1
|
6.9
|
6.4
|
9.2
|
8.6
|
Price/Book (x)
|
0.7
|
0.6
|
0.6
|
0.5
|
0.5
|
EV/EBITDA (x)
|
4.2
|
6.1
|
7.4
|
6.1
|
5.5
|
