IIFL
IIFL recommends ‘Add’ on Hindalco Industries
Edited by : AL CIRCLE
1 min read
IIFL Institutional Equities, a part of the IIFL Group, one of the leading players in the Indian financial services space, recommends ‘Add’ on Hindalco Industries given the high margin of safety and relatively higher earnings visibility.
At recent site visits at Hindalco’s aluminium plant at Renukoot in Uttar Pradesh and the forthcoming aluminium smelter at Mahan, Madhya Pradesh, IIFL noted that work at the latter was progressing at breakneck speed and project timelines indicated by the company looked optimistic.
According to IIFL, raw material sourcing rather than execution was the key challenge. While coal linkage and alumina-availability issues should be resolved in the medium term, production cost could rise to $2,000/tonne in the interim, the report said.
The brokerage believes that these concerns, although relevant, were priced in. “Novelis’ high earnings visibility is a big positive in the current milieu,” IIFL said.
"Valuations appear attractive even if we do not ascribe value to the ongoing Greenfield projects on which $2.8 bn has been spent," IIFL said.
At recent site visits at Hindalco’s aluminium plant at Renukoot in Uttar Pradesh and the forthcoming aluminium smelter at Mahan, Madhya Pradesh, IIFL noted that work at the latter was progressing at breakneck speed and project timelines indicated by the company looked optimistic.
According to IIFL, raw material sourcing rather than execution was the key challenge. While coal linkage and alumina-availability issues should be resolved in the medium term, production cost could rise to $2,000/tonne in the interim, the report said.
The brokerage believes that these concerns, although relevant, were priced in. “Novelis’ high earnings visibility is a big positive in the current milieu,” IIFL said.
"Valuations appear attractive even if we do not ascribe value to the ongoing Greenfield projects on which $2.8 bn has been spent," IIFL said.
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