Hindalco Q1 Results Review - Best Upstream Aluminium Ebitda Margin, Record Copper Ebitda; Buy: Anand Rathi

Anand Rathi Report

The strategic expansions in Bay Minette, UAL (South Korea), Aditya and Silvassa are on track, with Hindalco Industries Ltd. commissioning its Guthrie plant in Q1 to enhance post-production and post-consumer automotive scrap-recycling capacity.

Besides the ongoing downstream expansion, which would enhance capacity more than 0.6 million tonnes, the company has identified many growth-capex projects for the domestic market.

In the next phase, it plans to enhance its alumina refining capacity in Odisha, set up a 0.2 million tonne copper smelter and a 180-pot primary aluminium smelter at Aditya.

In line with the extension of Novelis’ IPO timeline, we slightly trim our enterprise value/Ebitda multiple from seven times to 6.5x. Given softer London Metal Exchange prices, we slightly trim our FY25e LME.

Considering the strong focus on recycling, adding capacity, integrating raw material and enhancing value added products, we retain a Buy with a sum-of-parts Rs 800 target price.

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