Hindalco Industries: Unlikely to fire in absence of coal


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
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