Hindalco shares gains 5% on rise in LME prices, better than estimates numbers

The company reported a 36 percent drop in consolidated net profit at Rs 2,205 crore for the quarter ended September 30, 2022 from Rs 3,427 crore in the year-ago period.

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Shares of Hindalco Industries gained 5 percent on November 14, on the back of rise in LME Aluminium prices.

On Friday, the LME Aluminium price was up 6 percent.

The stock price also get boosted from relaxation of Covid restriction in China and better than expected earnings for the quarter ended September 2022.

Hindalco Industries on November 11 reported a 36 percent drop in consolidated net profit at Rs 2,205 crore for the quarter ended September 30, 2022 from Rs 3,427 crore in the year-ago period due to decline in aluminium prices and rising input costs.

Sequentially, the profit dropped 46 percent from Rs 4,119 crore, its highest-ever quarterly profit, in the April-June period.

Consolidated revenue of the Aditya Birla Group company rose 18 percent on-year to Rs 56,176 crore from Rs 47,665 crore in the year-ago quarter. Sequentially, the revenue was marginally down 3 percent from Rs 58,018 crore.

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Here is what brokerages have to say about stock and the company post June quarter earnings

Motilal Oswal

Management stated that Novelis’ EBITDA is likely to be around USD525/t in about two quarters from now when most of the contracts are renewed; however, it will face headwinds in the near term on lower metal spreads.

In the near term, we note that the LME at current levels factors in the pessimism in the macro environment including: a) slowdown in China, b) recession in Europe, and c) elevated level of inflation in the US, which could drag growth going forward.

We have raised our FY23E/24E EBITDA by 8%/15% driven primarily by the 54%/58% hike in India business, respectively. As a result, our consolidated PAT has increased 13%/23% for FY23E/24E, respectively.

We maintain our buy rating with a SoTP-based revised Target Price of Rs 520 (v/s INR480 earlier). China remains the key risk to the sector.

JPMorgan

We have kept ‘overweight’ rating on the stock and cut the target price to Rs 520 from Rs 560 per share.

In the near-term stock should trade higher with LME aluminium, while in the medium-term the Novelis margins are difficult to call.

The muted Q2FY22 was on lower India aluminium.

We have cut FY23 EPS estimate by 17% & FY24-25 by 9-10%, reported CNBC-TV18.

At 09:37 hrs Hindalco Industries was quoting at Rs 449.90, up Rs 20.15, or 4.69 percent on the BSE.

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