Stock To Buy: World's Largest Flat-roll Aluminium Stock Could Surge 31%

Motilal Oswal suggests buying shares of Hindalco Industries Ltd, as the brokerage feels the stock price of the company will rally upto 30%, based on the estimates. Hindalco is the world's largest aluminum flat-rolled products player, is part of conglomerate, Aditya Birla Group. Hindalco reported a consolidated net profit for the third quarter, stood at Rs 1,362 crore, a decrease of 63% YoY, primarily due to elevated input costs, unfavourable macros and inflationary impacts.

Hindalco Industries, Management's View

In the 3QFY23 press release, filed with the stock exchange, Insightful views of Satish Pai, Managing Director, Hindalco Industries, were reported. "We are seeing core industries worldwide being buffeted by macro-economic and inflationary cost pressures, yet we delivered a strong operational performance with higher volumes across India business segments. Though the India Aluminium upstream business EBITDA came under pressure from the surge in input costs and lower realisations, this was partially offset by higher volumes. The India Aluminium downstream business segment delivered a higher EBITDA YoY, due to higher volumes and better pricing. The Copper business registered a 40% growth in EBITDA driven by higher volumes and better realisations, supported by a robust domestic demand. Novelis witnessed unprecedented inflationary pressures, unfavourable foreign exchange rates and lower shipments; this was partially offset by higher pricing and a favourable product mix. Despite the hits of this quarter due to external factors, we believe the long-term story remains positive backed by our strong balance sheet and resilient business model."

Motilal Oswal's view: Hindalco Industries Ltd stock to Buy, with a target price of Rs 570 per share.

The brokerage explains the reason for recommending investors to buy Hindalco Industries Ltd stock. "In line with the 3Q financial performance and management guidance, we lower our FY23/FY24 EBITDA estimate by 7%/3%, primarily due to a weak macroeconomic condition, fears of recession in Europe and higher input costs. However, we believe that the stock has fully priced in these headwinds. We remain confident about the company's long-term growth opportunities and believe that the weakness in the stock post 3Q results should be an opportunity to buy. We maintain our Buy rating and lower our SoTP-based price target to Rs 570 (from Rs 600 earlier). A weak European economic scenario remains the key risk to the sector."

Stock performance

Hindalco Industries stock price is currently trading at Rs 433.55 per share, it is down by 2.43% from previous day. However, in three years the stock price of this large cap has gone up by whopping 127.23%. Its 52-week high is at Rs 636 per share, while its 52-week low is at Rs 309 per share and its free flow market capitalisation is Rs 63,320.33 crore.

Disclaimer

The stock has been picked from the brokerage report of Motilal Oswal, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.