Why Brokerages are Bullish on Hindalco

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Why Brokerages are Bullish on Hindalco
Credit: © Reuters.

By Aditya Raghunath

Investing.com -- Hindalco Industries Ltd. (NS: HALC ), the world’s largest aluminum rolling company, reported record numbers for the third quarter of FY21, ended December 2020. Net profit surged 76% to Rs 1,877 crore compared to estimates of Rs 983 crore. Revenue came in at Rs 34,958 crore compared to estimates of Rs 19,671 crore.

Novelis, Hindalco’s North American subsidiary, and the domestic Indian business, both turned in strong performances in the quarter. Increased cost efficiencies, higher volumes, better product mix, and stable operations all contributed to the growth as well.

Hindalco shares ended on February 10 at Rs 279.7, up 0.59%. Company shares have risen by over 23% in February 2021. Brokerage firm Edelweiss Financial Services Ltd. (NS: EDEL )has given a target of Rs 308 to the Aditya Birla flagship metals company, an upside of over 10% from current levels, even before the company declared its Q3 results. Edelweiss said that Novelis will help Hindalco deleverage and lend stability to its earnings.

Prabhudas Lilladher has also recommended a buy on the stock with a price target of Rs 305. It says that Hindalco management expects to revive spreads as transportation bottlenecks in the world ease up. It also said, “In line with our expectation, management expects to achieve guidance of Net debt/EBITDA<3x earlier than targeted timeline of FY23e.”  

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