Hindalco hits fresh 52-week high on robust Q1 results

Thus far in 2016, the stock soared 79% from Rs 85 to Rs 152, as compared to 8% rise in the S&P BSE Sensex.

Hindalco Industries has moved higher to its fresh 52-week high of Rs 152, up 4% on the BSE, after the company reported a standalone net profit of Rs 294 crore for the quarter-ended June 30, 2016 (Q1FY17). The net profit was higher than average analyst expectation of Rs 233 crore on the back of strong operational performance. The company had profit of Rs 61 crore in the year-ago period.

Net sales stood at Rs 7,597 crore, down 13% from Rs 8,575 crore in the same period last year due to weakness in copper business.

The company’s EBITDA ((earnings before interest, depreciation and taxes) margin improved 600 basis points to 17.78 from 11.72%.

"The company has delivered robust operational performance in adverse macroeconomic conditions. Its operational performance was supported by deflationary energy prices. Macroeconomic headwinds will persist and uncertain global macro factors pose challenges. The level of imports continues to impact domestic sales volumes," Hindalco said in a statement.

Religare Institutional Research upgrades the stock with ‘buy’ rating to higher target price of Rs 190 from Rs 100 earlier.

“We derive comfort from Hindalco’s successive outperformance over the past two quarters along with lower debt levels due to management’s focus on low capex and cash conservation,” the brokerage firm said in a results update.

We raise our FY17 EBITDA estimates from Rs 11,000 crore to Rs 12,500 crore. With a consolidated FY17 capex of Rs 2,500 crore- Rs 3,000 crore and a strong EBITDA trajectory, Hindalco can generate free cash flow of Rs 2,500 crore which could be used to retire debt, added report.

Thus far in 2016, the stock soared 79% from Rs 85, as compared to 8% rise in the S&P BSE Sensex.