How to trade Hindalco shares after profit plunges 48% YoY in Q4

Hindalco’s profit after tax (PAT) stood at Rs 832 crore for the quarter ended March. It was Rs 1,601 crore in the same quarter last year. On a consolidated level, PAT fell 37% YoY to Rs 2,411 crore, while revenue jumped 5% YoY to Rs 55,857 crore.

Revenue from operations during the quarter increased 5% to Rs 19,995 crore as against Rs 18,969 crore in the corresponding quarter of the previous fiscal.

Novelis delivered an improved quarter-on-quarter (QoQ) performance with net income of $175 million, up 82%. Novelis’ revenue in Q4FY23 stood at $4.4 billion, down 8% YoY, impacted by lower average aluminium prices and subdued sales volume YoY.

Here’s what brokerages recommend on the stock:

CLSA: Buy | Target: Rs 550
CLSA maintained a ‘Buy’ rating on Hindalco Industries for a price target of Rs 550. It said that India profitability was ahead of estimate and debt declined as well for the quarter ended March 31, 2023. Guidance looks conservative while leverage remains low.

Kotak Institutional Equities: Add | Target: Rs 455
We trim earnings, maintain ADD with Fair Value of Rs 455. We have trimmed our EBITDA estimate by 2.3%/0.3% for FY2024/25E, mainly led by lower margins in the aluminum business. Our FV remains unchanged at Rs 455 at the unchanged 6X EV/EBITDA March 2025E. Stock trades at an inexpensive 5.4X EV/EBITDA FY2025E, but the uncertain outlook of Novelis earnings should keep the stock under pressure in the near term.

Nuvama: Hold | Target: Rs 444
We expect Hindalco’s Q1FY24E EBITDA to be weak due to softer aluminium prices, and lower aluminium as well as copper volumes. Accordingly, we are cutting FY24E/25E EBITDA by 8.3%/8.7%, factoring in lower prices and higher costs. We retain ‘HOLD’ with a target price of Rs 444 (earlier Rs 464), valuing Novelis/India at 5.5X/5X FY25E EV/EBITDA.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)