Friday, 14 November 2008

Sell Hindalco: Motilal Oswal

Motilal Oswal has downgraded its rating on Hindalco Industries to sell in its November 12, 2008 research report. "Adjusted 2QFY09 PAT increased 12% YoY to Rs 7.2 billion. We are factoring in aluminium prices of USD 2,200/ton for 3Q and USD 2,000/ton for 4Q. As a result, we expect consolidated FY09E PAT to increase 5.2% YoY to Rs 20.8 billion, while EPS will decline 26.3% YoY to Rs 11.9 owing to dilution on account of the rights issue. FY10E EPS will decline further by 49% YoY to Rs 6.1 after factoring in aluminium prices of USD 2,000/ton. We believe the company’s major expansion programs to raise aluminium capacity by 3x to 1.5mtpa in next five years will get delayed for want of funds. The stock trades at 9.2x FY10E EPS. Downgrade to Sell," says Motilal Oswal's research report.

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Source: Moneycontrol

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