Hindalco Novelis Q4 Results Review- Guidance Achieved; Eyeing For $600/Tonne Of Ebitda (adj): ICICI Securities

ICICI Securities Report

Hindalco Industries Ltd.'s wholly owned subsidiary Novelis’ Q4 FY24 Ebitda was 3% ahead of our estimates. Key points:

1. Adjusted Ebitda at $540/tonne (up 25% YoY) was aided by favourable costs.

2. Shipments were aided by progressive improvement in beverage packaging demand.

3. Net debt/Ebitda at Q4 FY24-end was at 2.3 times despite capex of $1.4 billion incurred during the year.

Going ahead, management expects long-term Ebita/tonne to inch towards $600 and recycling content to increase to 75% by end of the decade. Taking cognizance of the current London Metal Exchange aluminium prices and outlook, we raise our FY25E/FY26E Ebitda by 14%/16%.

Furthermore, we raise our valuation multiple to seven times (earlier 6.5 times). Our revised target price works out to Rs 770 (earlier Rs 620). Maintain Buy.

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