Thursday, February 20, 2014

 Hindalco Industries Ltd: SELL 
CMP: Rs.97.4
Hindalco Industries Ltd came out with a flat topline and depressed bottmline for Q3FY14. The total income of the company for the December, 2013 quarter came as Rs.7477.28 Cr as against Rs.7189.80 Cr in the same period previous year and slightly higher in case of September, 2013 quarter. 

However, the net profit of the company came as Rs.333.98 Cr in December, 2013 quarter as against Rs.433.52 Cr in Q3FY13 and Rs.357.11 Cr in Q2FY14. The nine months EPS of the company stands at Rs.5.95, which indicates the stock is ready for some correction. A sell call was given to the Paid Group members today, for a short term target of Rs.93. However, it can go down to Rs.91 also, in the short term.  

In Q3FY14, lower other income and Higher effective tax rate affected financial performance despite good operational performance. Hence, over a longer time period, the outlook remains bullish, since the demand is expected to remain robust, on the back of spike in consumption. Also, strong Premia despite announcement of changes in LME warehousing rules are reflective of scarcity in the physical markets. Once, this correction gets over and the scrip makes a base, one can slowly accumulate the counter.