Hindalco shares tank 14% on Novelis' Bay Minette return guidance. Should you buy?
Hindalco Industries tanked 14% to the day's low of Rs 501.10 on the NSE on Tuesday after its US-based subsidiary Novelis lowered its returns guidance for Bay Minette project to double digits from an earlier mid-teens. The company also announced an additional capex for the project which came as a shocker for the Street.
On Monday, Novelis reported net income at $174 million which was up 81% year-on-year (YoY) though it excluded special items, the company filing said. The adjusted EBITDA was reported at $454 million which was up 33% YoY. The company reported net sales at $3.9 billion for the third quarter of fiscal year 2024, which decreased 6% versus the prior year period driven by lower average aluminum prices as shipments were in line with prior year levels.
Read More: Hindalco Q3 results today: After strong Novelis show, what should D-Street expect from the aluminium major
Here's what brokerages recommended:
Kotak Equities: Add | Target: Rs 535
Kotak has recommended an 'Add' rating on Hindalco Industries for a price target of Rs 535. The brokerage has expressed a surprise on the Novelis—capex front. The December quarter earnings were in line with its estimates.
Novelis’ 3QFY24 adjusted EBITDA came in line with its estimates with the demand outlook improving in America, whereas Europe and Asia remain under pressure. The company has revised the capex outlay upward for its key growth project—greenfield expansion in North America — by 65% to US$4.1 bn and delayed the timeline by one year to end FY2027E.
