ICICIdirect.com is bearish on Hindalco Industries and has recommended to sell rating on the stock with a target price of Rs 108, in its research report dated April 10, 2014.
"Hindalco Industries, the non-ferrous metal major had a decent stock price appreciation in the recent past. We however feel that the stock price appreciation has further stretched the company's valuation (core business quoting at 7.6x FY15E EV/EBITDA) amid subdued macroeconomic conditions. Furthermore, the company's debt levels are expected to remain at elevated levels with meaningful debt reduction only post FY16E. The company is expected to end FY14 with a gross debt of Rs 57906 crore & net debt of Rs 48147 crore. The company's overseas subsidiary Novelis on the other hand has reported subdued performance in the recent past with Q3FY14 EBITDA/tonne coming in at US$ 271/tonne. We expect Novelis to report better performance going forward however the pace of improvement is expected to be much slower (given the high regional metal premiums). On the back of stretched valuations we advice investors to exit the counter and are downgrading the stock from HOLD to SELL. We maintian our target price of Rs 108 on the stock", says ICICIdirect.com research report.
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