Broker’s call: Hindalco (Buy) – The Hindu BusinessLine

Target: ₹570

CMP: ₹469.75

We visited Hindalco Industries’ Hirakud and Aditya plants in Odisha to understand the processes and operations.

The Aditya smelter is one of the most efficient and low-cost smelting plants in the world. It is highly automated, with significant usage of technology, cranes, and other equipment to control operations. Hindalco is increasingly focusing on downstream FRP expansion, which would help improve profitability. This would be a cost-effective integrated process, as Hindalco would be able to manufacture FRP products using its own hot mill capacity. Through automation and using the latest technology, Hindalco is looking to further reduce costs at every process level.

It is following strict safety measures and providing simulation-based training processes for optimum efficiency.

With a strong balance sheet, Hindalco will fund all incremental capex via internal accruals. The company has robust integrated operations in place and focuses on more profitable downstream capacity addition. Measures to cut costs at every level are visible, and as new capacities become operational, earnings growth will see further traction.