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Stock recommendation: Hindalco Industries — Buy — Target price Rs 305
Publish date: August 8, 2018
Results update: Another strong quarter
Key highlights
- Hindalco’s arm, Novelis, had a strong June quarter on the back of operating efficiencies and higher capacity utilisation. The earnings would have been higher but for lower volumes in North America and Brazil.
- The company’s earnings trajectory is likely to go north in future because it is set to acquire Aleris, which is likely to improve the company’s product mix and its presence in high-value markets.
Valuation & outlook
We reckon the company’s earnings will improve because its North America and Brazil divisions would do better in the second quarter. Plus, the improving fundamentals of aluminum and receding inventories will help the company sustain its profitability.
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