LISTING |
|
|
Rs 79 |
|
Rs 142/Rs36 |
|
Rs 1 |
PE Ratio |
6 |
Market Cap |
Rs 12431 crore |
COMPANY OVERVIEW:
Hindalco was established in the year 1958, commissioned its first aluminum facility at Renukoot. Hindalco is the flagship company of the Aditya Birla Group. Company is industry leader in aluminium and copper. Hindalco is the world’s largest aluminium rolling company and one of the biggest producers of primary aluminum in Asia. Its copper smelter is the world’s largest custom smelter at a single location.
In 2007, the acquisition of Novelis Inc. a world leader in aluminum rolling and can recycling, marked a significant milestone in the history of the aluminium industry in India. With Novelis under Hindalco, Hindalco ranks among the top five aluminum majors, as an integrated producer with low cost alumina and aluminum facilities combined with high-end rolling capabilities and presence in 12 countries outside India.
Hindalco in India enjoys leadership position in aluminum and copper. The company `s aluminum units across the country encompass the entire gamut of operations from bauxite mining , aluminum, smelting to downstream rolling, extrusion, foil and alloy wheel along with captive power plant and coal mines.
CAPITAL EXPENDITURE PLAN SEEMS TO BE INTACT:
Hirakud:Phase 2 of the smelting capacity from 0.1 mtpa to 0.143 mtpa was completed on schedule. Expansion to 0.155 mtpa is on line and it will be completed by august 2009.the expansion to 0.206 mtpa by FY2012.
Belgaum capacity expansion from 0.138 mtpa to 0.316 mtpa will be commissioned by FY2011.
UTKAL Alumina with refining capacity of 1.5 mtpa refinery and 90mw power generation and a 2 mtpa Bauxite mining facility is coming up in Raigada, Orissa. It is expected to start its operation by July 2011.
The Mahan Aluminum Project is coming up in Bargwan, MP. The smelter will have the capacity of 0.359 mtpa and captive power plant of 900 mw. It is expected to be commissioned by July 2011.
Aditya Aluminum is an integrated Aluminum project coming up in Orissa, with a 1.5 mtpa refinery, 0.359 mtpa and 900 mw captive power plant. Production from the smelter would start by October 2011. The refinery should be mechanically completed by June 2013.
Jharkhand Aluminum is an Aluminum smelter coming up in Sonahatu, Jharkhand, with a capacity of 0.359 mtpa. A 900 mw captive power plant will also be part of the project. The project is expected to be completed by 2013.
REASON FOR AVOIDING THE STOCK AT CURRENT LEVEL:
Subdued global market. Commodity prices are further expected decline in the coming days.
LME stock inventory is at 4.4 mmT which is equivalent to about 7 weeks of consumption for current year. This caps the upward price movement of aluminum.
Yoy change in net profit is -10%.
For the quarter ended March 2009 the net profit plunged by 78% as compared to the similar quarter last fiscal.
SHAREHOLDING PATTERN:
|
|
NO. OF SHARE |
%OF TOTAL |
PROMOTER |
613797188 |
|
36.10% |
|
INSTITUTION |
491687654 |
|
28.92% |
|
GENERAL PUBLIC |
594785965 |
|
34.98% |
|
GRAND TOTAL |
1700270807 |
|
100% |
|
In last three quarter promoters has increased their stakes from 31% to 36.2% at present.
FINANCIAL:
|
|
31/03/06 |
31/03/07 |
31/03/08 |
31/03/09 |
TOTAL SALES |
11640.4 |
18683.1 |
19693.9 |
18856.3 |
yoy %change |
|
60.50% |
5.41% |
-4.25% |
EXPENDITURE |
-8791.4 |
-14298 |
-15799.9 |
-15183.8 |
PBDITA |
|
2849 |
4385.1 |
3894 |
3672.5 |
yoy %change |
|
54% |
-11.20% |
-5.70% |
DEPRECIATION |
-521.1 |
-639.1 |
-587.8 |
-645.27 |
PBIT |
|
2327.9 |
3747 |
3306.2 |
3027.23 |
yoy %change |
|
60.90% |
-11.70% |
-3% |
INTEREST |
|
-225.2 |
-242.4 |
-280.6 |
-336.93 |
PBT |
|
2102.7 |
3504.9 |
3025.6 |
2690.3 |
TAX |
|
-450.2 |
-940.3 |
-705.4 |
-610.88 |
PAT |
|
1652.5 |
2564.6 |
2320.2 |
2079.42 |
yoy %change |
|
55.20% |
-9.60% |
-10.37% |
KEY HIGHLIGHTS:
Total sale declined by 4.25% yoy.
PBDITA declined by 5.27% yoy.
PAT down by 10.37% yoy.
RATIOS:
|
|
31/03/06 |
31/03/07 |
31/03/08 |
31/03/09 |
EPS |
|
9.720588 |
15.08588 |
13.64824 |
12.23188 |
PBDITA MARGIN |
24.4751 |
23.47094 |
19.77262 |
19.47625 |
NPM |
|
14.19625 |
13.72684 |
11.78131 |
11.02772 |
INTEREST COVER |
10.33703 |
15.45792 |
11.78261 |
8.984745 |
KEY HIGHLIGHTS:
PBDITA margin down from 24.4% in FY2006 to 19.47% in FY2009.
NPM down from 14.2% in FY2006 to 11% IN FY2009.
Interest cover down from 10.3 in FY2006 to 8.98 in FY2009.
COMPARISION OF Q4FY2009 WITH Q4FY2008:
|
|
Q4FY08 |
% change |
|
Q4FY09 |
TOTAL INCOME |
5154.4 |
-25% |
|
3866.49 |
EXPENDITURE |
-4213.5 |
|
|
-3457.52 |
PBDITA |
|
940.9 |
-56.56% |
|
408.97 |
DEPRECIATION |
-151.6 |
|
|
-168.21 |
PBIT |
|
789.3 |
|
|
240.76 |
INTEREST |
|
-98.8 |
|
|
-82.1 |
PBT |
|
690.5 |
|
|
158.66 |
TAX |
|
-154.2 |
|
|
-40.72 |
PAT |
|
536.3 |
-78% |
|
117.94 |
VALUATION:
We expect the market for commodity to remain dull for next two years. It will show revival only in FY2011. The price of aluminum is expected to decline as there is excess capacity in the industry. We expect EPS of Rs10 in FY2010 and looking at the present scenario we are valuing the company at 5X to FY2010E EPS. The fair valuation we arrive is at Rs50.
The current market price is Rs74. So there is considerable downside in the stock.
CONCLUSION:
Investor should avoid the counter at present price. It will be value buying as the price comes to this level.
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