Shares of Hindalco Industries Ltd. rose after its U.S. arm’s operating performance beat analysts’ estimates in the quarter ended June.
Here's what brokerages have to say about Novelis' June-quarter performance and its potential implications for parent Hindalco.
Motilal Oswal
Reiterates 'buy', raises target price to Rs 490, an implied return of 18.29%.
Rise in semiconductor supplies aided Novelis' North America performance as well as the overall beat in adjusted Ebitda.
Novelis' Ebitda guidance may be conservative even after the hike in Ebitda per tonne guidance.
Management expects working capital release for rest of the year as LME aluminum has corrected.
Marginally raises FY23 estimates for Novelis, given the strong Q1 performance.
Novelis continues to enjoy strong leadership position in secondary aluminum business.
Kotak Institutional Equities
Reiterates 'buy', raises target prices to Rs 550 from Rs 540, an implied return of 27.85%.
Novelis' Ebitda beat was aided by a sharp margin recovery in North America.
Concerns around economic growth slowdown in the West and its impact on Novelis are overblown.
Expects Novelis to recover from this phase of high cost inflation due to tight end-use market.
Expects Novelis' strong earnings to aid in compensating for the contraction in Indian aluminum spreads.
JM Financial
Reiterates 'buy' with a target price of Rs 515, an implied upside of 24.32%.
High product pricing, pass-through of higher cost to customers, favourable product mix (automotive and aerospace shipping) aided Novelis' adjusted Ebitda.
Novelis is set to witness stable demand for sustainable aluminum solutions.
Identifies Hindalco as a preferred play in the metal space.
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