Axis Direct's research report on Hindalco Industries
Q1FY18 standalone EBITDA at Rs 11.5 bn (down 7% YoY) was below our estimate and consensus estimates due to lower profits in Copper (lower TCs and acid realization). Standalone Aluminum EBITDA appears lower due to Alumina transfer pricing. Utkal Alumina's EBITDA jumped 3x YoY at Rs 3 bn.
Outlook
We remain bullish on Hindalco due to rising LME Aluminum price (currently at USD 2,030/t) and strong free cash flow generation over the next 3 years. Chinese government’s effort to close smelting capacities (to reduce pollution) from this winter (Oct’17 onwards) will tighten up global Aluminum markets in H2FY18.
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