Result Update

August 16, 2016

Rating matrix
Rating
Target
Target Period
Potential Upside

:
:
:
:

Hindalco Industries (HINDAL)

Sell
| 140
12 months
-11%

Cost of domestic aluminium operation to rise

Whats Changed?
Target
EPS FY17E
EPS FY18E
Rating

Changed from | 100 to | 140

Changed from | 8.3 to | 11.8
Changed from | 9.3 to | 12.8
Changed from Hold to Sell

Quarterly Performance (Standalone)

Revenue
Adj. EBITDA
EBITDA (%)
Rep. PAT

Q1FY17 Q1FY16
7,597.3 8,575.3
1,132.5 868.5
14.9
10.1
294.1
61.1

YoY (%)
-11.4
30.4
47.2
381.3

Q4FY16
8,667.5
1,166.4
13.5
356.3

QoQ (%)
-12.3
-2.9
10.8
-17.5

Key Financials (Cons)

| Crore
Net Sales
EBITDA
Rep Net Profit
EPS (|)

FY15
104281.1
8944.6
854.2
4.1

FY16E
100053.8
8724.0
263.3
1.3

FY17E
104585.8
12052.6
2441.9
11.8

FY18E
107287.7
12279.5
2641.6
12.8

Valuation summary
P/E
Target P/E
EV / EBITDA
P/BV
RoNW
RoCE

FY15
37.5
31.4
9.7
0.8
2.2
5.0

FY16E
121.5
109.5
10.0
0.8
0.7
4.3

FY17E
13.1
11.8
7.0
0.8
6.0
7.0

FY18E
12.1
10.9
6.5
0.7
6.1
7.0

Stock data
Stock Data
Market Capitalization
Total Debt (FY16E)
Cash and Investments (FY16E)
EV
52 week H/L
Equity capital
Face value

| 32007.5 Crore
| 67068.7 Crore
| 11860.3 Crore
| 87136.8 Crore
156 / 59
| 206.5 Crore
|1

Price performance (%)

Return %
Hindustan Zinc
Vedanta
Hindalco Ind

1M
18.1
18.5
17.6

3M
30.0
63.7
62.3

| 155

6M
51.2
136.5
113.7

12M
65.0
31.1
36.1

Research Analyst
Dewang Sanghavi
dewang.sanghavi@icicisecurities.com

ICICI Securities Ltd | Retail Equity Research

Hindalco reported a good set of Q1FY17 numbers wherein EBITDA

and PAT came in higher than our estimate. Aluminium operations led
the beat while copper operations volume came in lower than
estimate. Lower cost of raw materials, especially energy inputs aided
margin expansion during the quarter
The topline came in lower than our estimate on the back of lowerthan-expected copper volumes. Revenues came in at | 7597.3 crore
(down 11.4% YoY), below our estimate of | 8370.4 crore. Revenues
from the aluminium segment grew 7.5% YoY to | 4263.3 crore while
revenue from the copper segment declined 27.7% YoY to | 3336.3
crore. The decline in copper revenues was primarily on account of
lower volumes. Copper production was lower owing to the planned
annual maintenance shutdown (cathode production was down 36%
YoY to 65 KT)
Adjusted EBITDA was at | 1132.5 crore (up 30.4% YoY), higher than
our estimate of | 922.8 crore. Adjusted EBITDA margin was at 14.9%,
higher than our estimate of 11.0% (EBITDA margin of 10.1% in
Q1FY17). Subsequently, reported PAT was up 381.3% YoY to | 294.1
crore vs. our estimate of | 160.0 crore
Margins of domestic aluminium operations likely to soften
As all the three projects (Utkal, Aditya and Mahan) are currently operating
close to their peak capacity, domestic aluminium operations have reached
closer to optimum capacity utilisation levels. Consequently CoP has
witnessed a declining trend over last couple of years due to economies of
scale and decline prices of key raw materials (viz coal and crude oil).
However, going forward, part of the benefit is likely to wind down with
the recent firming up of crude oil prices (crude and crude derivatives
accounting for ~20% of the costs). Furthermore, partial benefits of
cheaper coal prices would also unwind as captive mines start producing
given the elevated levels at which bids have happened. Softening of
global cost curve for aluminium is also likely to result in restarting of
closed mills in China, which is likely cap the upside in global aluminium
prices. Hence, we expect the EBITDA/tonne of domestic aluminium
operations to soften from US$464/tonne reported in Q1FY17. For
domestic aluminium operations we have modelled EBITDA/tonne of
US$350/tonne in FY17E and US$375/tonne in FY18E.
Novelis volume disappoints; EBITDA/tonne impressive
Novelis reported a good set of Q1FY17 numbers. While total rolled
product shipments came in at 755 KT, lower than our estimate of 785 KT,
EBITDA/tonne came in at US$363/tonne, higher than our estimate of
US$300/tonne. The ensuing EBITDA was at US$274 million, higher than
our estimate of US$236 million. Going forward, we have modelled
EBITDA/tonne of US$350/tonne for FY17E and US$375/tonne for FY18E.
Risk-reward unfavourable; downgrade to SELL
While the company reported a good Q1FY17 performance, we expect
operating cost to increase on account of the recent up-tick witnessed in
prices of key raw materials. Furthermore, additional supplies from China
are likely to keep global aluminium prices in check. We value Hindalco on
an SOTP basis, thereby arriving at a target price of | 140. We assign a
SELL recommendation to the stock. The key risk to our call is any
sustained rally in global aluminium prices.

Variance analysis
v

Q1FY17 Q1FY17E

Q1FY16

YoY (%)

7,597.3

8,370.4

8,575.3

-11.4

8,667.5

-12.3

119.2

237.0

91.7

29.9

204.1

-41.6

Total Manufacturing Expense

6,464.8

7,447.6

7,706.8

-16.1

7,501.1

-13.8

Adjusted EBITDA
Adjusted EBITDA Margin (%)
Depreciation
Interest

1,132.5
14.9
338.2
599.6

922.8
11.0
351.8
579.4

868.5
10.1
330.7
604.0

30.4
47.2
2.3
-0.7

1,166.4
13.5
341.2
574.7

-2.9
10.8
-0.9
4.3

99.0

0.0

44.2

NA

0.0

NA

412.9
118.9
294.1

228.6
68.6
160.0

69.7
8.6
61.1

492.3
1,279.0
381.3

454.7
98.4
356.3

-9.2
20.9
-17.5

62400

98000

98000

-36.3

97000

-35.7

Copper sales volume came in lower than our estimate

290000

305000

249000

16.5

328600

-11.7

Aluminium sales volume came in marginally lower than our estimate

Novelis, Rolled Product Shipments (Kt)

755

785

768

-1.7

788

-4.2

Novelis, EBITDA/tonne (US$/tonne)

Source: Company, ICICIdirect.com Research

363

300

174

108.6

335

8.4

Total Operating Income

Other Income

Exceptional item
PBT
Tax Outgo
PAT
Key Metrics
Total Copper sales (tonne)
Total Aluminium sales (tonne)

Q4FY16 QoQ (%)

Comments
Total operating income came in lower than estimate on back of subdued
copper sales volume
Other income came in lower than our estimate

EBITDA came in higher than our estimate

EBITDA margin came in higher than our estimate
Depreciation charge came in marginally lower than our estimate
Interest expense came in marginally higher than our estimate
Exceptional item for the quarter majorly represents gain on financial
instruments (net)
PBT came in higher than our estimate
Ensuing PAT also came in higher than our estimate

Novelis rolled products shipments came in marginally lower than our

estimate
Novelis EBITDA/tonne came in notably higher than our estimate

Change in estimates
FY17E
FY18E
(| Crore)
Old
New % Change
Old
New % Change
Revenue
105,904.8 104,585.8
-1.2 107,287.7 107,287.7
0.0
EBITDA
10,786.2
12,052.6
11.7 11,249.1 12,279.5
9.2
EBITDA Margin (%)
10.2
11.5 134 bps
10.5
11.4
96 bps
PAT
1,720.9
2,441.9
41.9
1,892.6
2,641.6
39.6
EPS (|)
8.3
11.8
41.9
9.2
12.8
39.6
Source: Company, ICICIdirect.com Research

Comments
Broadly maintained topline estimates
Upward revised EBITDA estimates
Upward revised EBITDA/tonne estimates
Upward revised estimates
Upward revised estimates

Assumptions
Current
Total Copper Production (Kt)
Total Aluminium Production (Kt)
Novelis, Rolled Product Shipments (Kt)
Novelis, EBITDA/tonne (US$/tonne)
LME Aluminium (US$/tonne)
LME Copper (US$/tonne)
USD: INR
Source: Company, ICICIdirect.com Research

FY16
392
1,133
3,120
308
1,600
5000
65

ICICI Securities Ltd | Retail Equity Research

FY17E
359
1,141
3,214
350
1,600
5000
65

Earlier
FY18E
397
1,168
3,350
375
1,600
5000
65

FY17E
392
1,141
3,214
275
1,600
5000
65

FY17E
397
1,168
3,350
325
1,600
5000
65

Comments
Downward revised estimates for FY17E
Maintained estimates
Maintained estimates
Upward revised estimates for FY17E and FY18E
Maintained estimates
Maintained estimates
Maintained estimates

Page 2

Company Analysis
Hindalco is a metal major with business interests in copper smelting &
aluminium manufacturing domestically. The company is also a leading
aluminium converter globally through subsidiary Novelis. HIL also owns
51% of Aditya Birla Minerals (ABML, Australia).
Domestic aluminium operations reached closer to optimum capacity
As all the three projects (Utkal, Aditya and Mahan) are currently operating
close to its peak capacity, domestic aluminium operations have reached
closer to optimum capacity utilisation levels. Consequently CoP has
witnessed a declining trend over last couple of years due to economies of
scale and decline prices of key raw materials (viz coal and crude oil).
However, going forward, part of the benefit is likely to wind down with
the recent firming up of crude oil prices (accounting for ~20% of costs).
Furthermore, partial benefits of cheaper coal prices would also unwind as
captive mines start producing given elevated levels at which bids have
happened. Softening of global cost curve for aluminium is also likely to
result in restarting of closed mills in China, which is likely cap the upside
in global aluminium prices. Hence, we expect the EBITDA/tonne of
domestic aluminium operations to soften from US$464/tonne reported in
Q1FY17. For domestic aluminium operations, we have modelled
EBITDA/tonne of US$350/tonne in FY17E and US$375/tonne in FY18E.
Exhibit 1: Alumina production

Exhibit 2: Aluminium (primary metal) production

3500
2680

3000
2500
1500

2951

2240
1319

1631
KT

KT

2000

2866

1000
500
0
FY13

FY14

FY15E

FY16

FY17E

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

FY18E

1400
1200
1000
800
600
400
200
0

1133

1141

1168

FY16

FY17E

FY18E

809
541

594

FY13

FY14

FY15E

Source: Company, ICICIdirect.com Research

Page 3

Copper volume comes in muted for Q1FY17

On account of maintenance shutdown, copper production for Q1FY17

came in subdued at 65 KT (down 36% YoY). The management indicated
that, going forward, it would fully recover the 35 KT lost in the quarter but
indicated that EBITDA would be better driven by more efficiency.
Restarting of copper smelter has been smooth post the shutdown.
Copper premiums & gold/silver premiums lead to higher copper revenue.

200
100
0
FY15E

FY16

FY17E

FY18E

938

1151

FY13

FY14 FY15E FY16 FY17E FY18E

Topline (LHS)

Copper production

| crore

KT

300

768

16398

FY14

397

359

15485

FY13

388

386

1600
1400
1200
1000
800
600
400
200
0

1419

17209

330

1522

1516

20451

316

21000
20000
19000
18000
17000
16000
15000
14000
13000
12000

17849

400

| crore

500

Exhibit 4: Copper division topline and EBIT trend

17306

Exhibit 3: Copper production trend

EBIT (RHS)

Source: Company, ICICIdirect.com Research

Source: Company, ICICIdirect.com Research

Novelis performance
Novelis reported a healthy set of Q1FY17 numbers. Total rolled product
shipments came in at 755 KT, marginally lower than our estimate of 785
KT. EBITDA/tonne came in at US$363/tonne, notably higher than our
estimate of US$300/tonne. The ensuing EBITDA was at US$274 million
higher than our estimate of US$236 million. The increasing automotive
shipments in the product mix enabled Novelis to post a strong
operational performance in Q1FY17. Better-than-expected performance
was largely due to improved product-mix, non-existence of startup costs
and reduced metal price lag (negative US$85 million in Q1FY16 vs.
negative US$13 million in Q1FY17). All five automotive finishing lines built
since FY13 have been commissioned and have begun shipping products
to customers. Automotive is expected to grow to 25% of shipment
portfolio when assets are fully utilised (already witnessed an increased
trend from 6% in FY12 to ~15% in FY16).
Exhibit 6: Novelis topline, EBITDA & EBITDA/tonne trend
16000

3750

FY14

US$ Million

3214

FY13

3120

FY12

3050

2895

2500

2786

3000

3350

3250

2838

Tonne (in Kt)

3500

2750

600
9806

14000
12000

9812

11147

10692

10826

500

11,097

400

10000
8000
6000

336

350
289

375

300

288

200

225

4000

100

2000
FY15

FY16E

FY17E

Sales Volume (Rolled Products)

FY18E

US$/tonne

Exhibit 5: Novelis rolled product shipments

0
FY13

FY14

FY15

FY16E

Sales (LHS)

FY17E

FY18E

EBITDA/tonne (RHS)

Source: Company, ICICIdirect.com Research

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 4

Key conference call highlights (Hindalco)

For Hindalcos standalone operations, the management has

maintained capex guidance of below | 1000 crore
The company realised net US$73 million from the sale of ABML,
which will be realised in Q2FY17
For standalone operations, the debt position remains largely same
with gross debt of | 24000 crore in long term, | 4000 crore in
short term while Utkal has debt of | 5000 crore. The standalone
books have ~| 7000-8000 crore of treasury. The management has
maintained its stance of short-term focus on deleveraging
Lower CoP during the quarter was driven by volume ramp up in
Aditya new smelter efficiency. Aluminium sales volumes was at
290 KT lower than production volume of 308 KT. The sales
volume is distributed between 217 KT of primary metal and 73 KT
of value added production. The copper sales were split between
24.4 KT of cathode and 38 KT of copper rods
Hindalcos standalone operations annual coal requirement was at
~16 MT out of which it has security of ~11.5 million tonnes. This
is split between new 4.5 million tonne captive coal linkage,
existing 4 MT linkage coal for Renusagar power plant and 2 MT,
which is being produced from Gare Palma IV/4&5. The
management mentioned that the Gare Palma blocks have very
high GCV and is on import parity. The Kathautia block is still not
operational but the management is fairly hopeful that it should
start in Q4FY17. Dumri coal block will start in FY18. Hindalco has
a total coal requirement of 16 MT. The new captive linkages will
start from October 2016

Key conference call highlights (Hindalco)

ICICI Securities Ltd | Retail Equity Research

The management has maintained the guidance of auto share to

be 25% of product portfolio by FY20 from 15% at FY16 end. The
beverage can segment will remain the mainstay with 64%
portfolio share as of FY16
Capex/FCF guidance shared by the company maintained at
US$250 million each for FY17. Out of US$250 million capex,
maintenance head would comprise of US$ 250 million. FCF will be
driven more by operational results and lower capex compared to
the working capital release seen in FY16. However, management
has maintained working capital release would be positive in FY17
Scrap utilisation increased to 55% in Q1FY17 from 53% in FY16.
The scope of increase is currently limited considering the ramp up
issues faced in Germany
No return of capital has been planned by the management in
FY17/18 as of now. The focus instead will be de-leveraging from
5x net debt to EBITDA on a trailing basis to 4x EV/EBITDA within
the next two years. This would invite discipline in capital spend in
next 24-30 months, which is reflected in the capex guidance

Page 5

Outlook and valuation

While the company reported a good performance in Q1FY17, we expect
operating cost to increase on account of recent uptick witnessed in prices
of key raw materials. Furthermore additional supplies from China are
likely to keep global aluminium prices in check. Furthermore, at current
aluminium prices, return ratios are also likely to remain in single digits
despite healthy ramp up witnessed in volume. We value Hindalco on an
SOTP basis, thereby arriving at a target price of | 140, assigning a SELL
recommendation on the stock. The key risk to our call is any sustained
rally in global aluminium prices.
Exhibit 7 : Target price calculation
Particulars
Hindalco Consolidated EBITDA (FY18E, | crore), A
FY18E gross debt (| crore), B
FY18E cash & cash equivalent (| crore), C
FY18E net debt (| crore), D=B-C
FY18E minority interest (| crore), E
Value of investments (quoted, at 20% discount), F
Implied Equity Value, Market Cap (| Crore), H=A-D-E+F+G
No.of shares, I
Implied target price (|), H/I

Value
12280

Multiple
6

Enterprise Value
73677
63069
14786
48282
432
3883
28846
206.5
140

Source: Company, ICICIdirect.com Research

Exhibit 8 : Valuation matrix

FY15
FY16E
FY17E
FY18E

Sales
(| cr)
104281.1
100053.8
104585.8
107287.7

Growth
(%)
18.9
-4.1
4.5
2.6

EPS
(|)
4.1
1.3
11.8
12.8

Growth
PE
(%)
(x)
9.3
-60.7
-69.2 120.8
827.4 13.0
8.2 12.0

EV/EBITDA
(x)
9.7
10.0
7.0
6.5

RoNW
(%)
2.2
0.7
6.0
6.1

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 6

RoCE
(%)
5.0
4.3
7.0
7.0

Recommendation history vs. consensus estimate

70.0
60.0

250

50.0

30.0

150

(%)

(|)

40.0

20.0
10.0
50

0.0
Jun-14

Sep-14

Nov-14

Jan-15

Price

Apr-15

Jun-15

Idirect target

Sep-15

Nov-15

Consensus Target Mean

Feb-16

Apr-16

Jun-16

% Consensus with BUY

Source: Bloomberg, Company, ICICIdirect.com Research

Key events
Date/Year
2004
2005
2006
2007

2008

Event
Copper smelter expansion, capacity raised to 250000 TPA
MoUs signed with state governments of Odisha and Jharkhand to set up greenfield alumina refining, smelting and power plants; commissioned copper III expansion,
taking total capacity of copper smelter to 500000 TPA
Comes out with a right issue amounting to | 2226.6 crore; enters into JV with Essar Power (MP) to develop and operate coal mines in Mahan, Madhya Pradesh;
company splits shares in ratio of 1:10
In May 2007, Novelis becomes a Hindalco subsidiary with the completion of acquisition process. The transaction makes Hindalco the world's largest aluminium rolling
company and one of the largest producers of primary aluminium in Asia; acquisition of Alcan's 45% stake in Utkal Alumina project makes Hindalco the 100% project
owner
Comes out with rights issue: raises | 4426 crore for re-financing bridge loan taken for Novelis acquisition; Hindalco Alex Aerospace (HAAL) facility becomes
operational and produces largest aluminium billet of 42 inch diameter

2009

Raises US$600 million through QIP route for projects

2011

Refinances Novelis debt amounting to US$4 billion; achieves financial closure of two projects through debt financing -Utkal Alumina for | 4906 crore and Mahan
Aluminium for | 7875 crore
Promoter infuses capital into the company by way of conversion of warrants (@| 143/share), of total | 2150 crore

2013
2015
2016

Utkal Alumina International Limited (100% subsidairy) made a total investment over |7500 crore in its Alumina plant at Rayagada, Odisha having capacity of 1.5 million
tonne per annum (MTPA)
Hindalco may have to halt mining at its biggest bauxite reserve at Baphlimali mine, as the part of the land was recently deemed forest requiring the company to obtain
new permit latest by March 9 this year

Source: Company, ICICIdirect.com Research

Top 10 Shareholders

Shareholding Pattern

Rank
1
2
3
4
5
6

Name
Aditya Birla Group
LIC Mutual Fund Asset Management Company Ltd.
Life Insurance Corporation of India
Dimensional Fund Advisors, L.P.
Bajaj Allianz Life Insurance Company Limited
BlackRock Institutional Trust Company, N.A.

Latest Filing Date % O/S

30-Jun-2016
0.3
30-Jun-2016
0.1
15-Apr-2015
0.1
31-May-2016
0.0
30-Jun-2016
0.0
31-Jul-2016
0.0

Position
684.3M
304.9M
233.9M
31.7M
30.2M
28.2M

Change
0
0
233.9M
0
4.6M
1.9M

Umang Commercial Co., Ltd.

30-Jun-2016

0.0

27.3M

The Vanguard Group, Inc.

30-Jun-2016

0.0

23.0M

-0.2M

Birla Institute of Technology & Science

30-Jun-2016

0.0

21.6M

10

Causeway Capital Management LLC

30-Jun-2016

0.0

12.5M

12.5M

(in %)
Promoter
FII
DII
Others

Jun-15 Sep-15 Dec-15 Mar-16 Jun-16

37.0
37.0
37.7
37.7
37.7
24.9
21.5
20.3
19.5
22.3
16.3
18.0
16.1
16.3
16.3
21.9
23.6
26.0
26.5
23.8

Source: Reuters, ICICIdirect.com Research

Recent Activity

Investor name
Causeway Capital Management LLC
Bajaj Allianz Life Insurance Company Limited
TGS Investment & Trade Pvt. Ltd.
FIL Investment Management (Hong Kong) Limited
BlackRock Institutional Trust Company, N.A.

Value
22.7M
8.5M
8.2M
6.2M
3.8M

Shares
12.5M
4.6M
4.5M
4.0M
1.9M

Investor name
ICICI Prudential Asset Management Co. Ltd.
BlackRock Asset Management North Asia Limited
UTI Asset Management Co. Ltd.
Grantham Mayo Van Otterloo & Co LLC
Reliance Nippon Life Asset Management Limited

Value
-5.7M
-3.7M
-2.4M
-1.2M
-1.4M

Shares
-3.1M
-1.9M
-1.3M
-1.2M
-0.8M

Source: Reuters, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 7

Financial summary (Cons.)

Profit and loss statement
(Year-end March)
Net Sales
Other Operating Income
Total Operating Income
Growth (%)
Total Operating Expenditure
EBITDA
Growth (%)
Depreciation
Interest
Other Income
Exceptional Item
PBT
Total Tax
PAT
Growth (%)
Minorities, Associates etc
Rep PAT after Assoc., MI
Adj PAT after Assoc., MI
Growth (%)
Adj EPS (|)

| Crore
FY15
104281.1
0.0
104281.1
18.9
95336.5
8944.6
7.9
3590.6
4178.4
1104.7
1940.1
340.2
256.4
83.9
-96.1
770.4
854.2
2794.3
28.5
4.1

FY16
100053.8
0.0
100053.8
-4.1
91329.8
8724.0
-2.5
4196.1
5046.7
1211.3
171.1
521.4
514.8
6.6
-92.2
256.7
263.3
434.4
-84.5
1.3

FY17E
104585.8
0.0
104585.8
4.5
92533.2
12052.6
38.2
4591.9
4880.2
711.7
0.0
3292.2
987.7
2304.5
34923.5
137.4
2441.9
2441.9
462.1
11.8

FY18E
107287.7
0.0
107287.7
2.6
95008.2
12279.5
1.9
4811.9
4887.8
987.5
0.0
3567.3
1070.2
2497.1
8.4
144.5
2641.6
2641.6
8.2
12.8

(Year-end March)
Profit after Tax
Add: Depreciation
Add: Interest
(Inc)/dec in Current Assets
Inc/(dec) in CL and Prov.
CF from operating activities
(Inc)/dec in Investments
(Inc)/dec in Fixed Assets
Others
CF from investing activities
Issue/(Buy back) of Equity
Inc/(dec) in loan funds
Interest Paid
Dividend paid & dividend tax
Inc/(dec) in Share Cap
Others
CF from financing activities
Net Cash flow
Opening Cash
Closing Cash

| Crore
FY15
854.2
3590.6
4178.4
-2681.8
4118.1
10059.4
614.7
-5437.6
-1349.7
-6172.6
0.0
3709.8
-4178.4
-241.6
-2883.5
-5.6
-3599.3
287.6
5021.3
5308.9

FY16
263.3
4196.1
5046.7
2595.4
-1513.6
10588.0
-1977.5
-3420.1
-1416.4
-6814.1
0.0
10.6
-5046.7
-241.6
289.6
0.0
-4988.1
-1214.2
5308.9
4094.8

FY17E
2441.9
4591.9
4880.2
-1150.7
323.4
11086.7
150.0
-2500.0
-472.1
-2822.1
0.0
-2000.0
-4880.2
-241.6
0.0
0.0
-7121.7
1142.9
4094.8
5237.6

FY18E
2641.6
4811.9
4887.8
-1925.5
1255.3
11671.1
150.0
-2500.0
-114.4
-2464.4
0.0
-2000.0
-4887.8
-241.6
205.8
0.0
-6923.6
2283.1
5237.6
7520.7

FY15

FY16

FY17E

FY18E

4.1
30.9
185.6
1.0
25.7

1.3
22.4
187.1
1.0
19.8

11.8
34.1
197.8
1.0
25.4

12.8
36.1
210.4
1.0
36.4

8.6
0.3
2.7
65
32
83

8.7
0.5
0.4
61
30
78

11.5
3.1
2.3
62
28
78

11.4
3.3
2.5
65
28
78

2.2
5.0
6.3

0.7
4.3
5.0

6.0
7.0
8.1

6.1
7.0
8.0

37.5
9.7
0.8
0.3
0.8

121.5
10.0
0.9
0.3
0.8

13.1
7.0
0.8
0.3
0.8

12.1
6.5
0.7
0.3
0.7

7.5
1.7
1.3
0.8

7.7
1.7
1.3
0.7

5.4
1.6
1.3
0.8

5.1
1.5
1.4
0.8

Source: Company, ICICIdirect.com Research

Source: Company, ICICIdirect.com Research

Balance sheet
(Year-end March)
Liabilities
Equity Share Capital
Reserve and Surplus
Total Shareholders funds
Total Debt
Deferred Tax Liability
Minority Interest & Others
Total Liabilities
Assets
Gross Block
Less: Acc Depreciation
Net Block
CWIP
Investments
Inventory
Debtors
Loans and Advances
Other Current Assets
Cash
Total Current Assets
Current Liabilities
Provisions
Current Liabilities & Prov
Net Current Assets
others
Application of Funds

Cash flow statement

| Crore
FY15

FY16

FY17E

FY18E

206.5
38122.0
38328.5
67058.2
3948.1
1771.1
111105.9

206.5
38433.3
38639.8
67068.7
3330.3
1409.6
110448.5

206.5
40633.6
40840.1
65068.7
3330.3
1319.5
110558.7

206.5
43239.4
43445.9
63068.7
3330.3
1229.4
111074.4

100606.8
28367.8
72239.0
13831.1
12346.3
18451.1
9186.4
7573.0
2481.0
5308.9
43000.5
23814.3
8218.6
32032.9
10967.6
1722.0
111105.9

109297.9
32564.0
76733.9
8560.1
14323.9
16794.0
8199.5
6350.0
3752.6
4094.8
39190.9
21306.4
9213.0
30519.3
8671.6
2159.0
110448.5

114797.9
37155.9
77642.0
5560.1
14173.9
17765.3
8023.0
7739.3
2719.2
5237.6
41484.5
22349.8
8492.9
30842.8
10641.7
2541.0
110558.7

120297.9
41967.8
78330.1
2560.1
14023.9
19106.0
8230.3
7939.3
2896.8
7520.7
45693.1
22927.2
9170.9
32098.1
13595.0
2565.4
111074.4

Source: Company, ICICIdirect.com Research

Key ratios
(Year-end March)
Per share data (|)
Reported EPS
Cash EPS
BV
DPS
Cash Per Share
Operating Ratios (%)
EBITDA Margin
PBT / Total Operating income
Adj PAT Margin
Inventory days
Debtor days
Creditor days
Return Ratios (%)
Adj RoE
Adj RoCE
RoIC
Valuation Ratios (x)
P/E
EV / EBITDA
EV / Net Sales
Market Cap / Sales
Price to Book Value
Solvency Ratios
Debt/EBITDA
Debt / Equity
Current Ratio
Quick Ratio

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 8

ICICIdirect.com coverage universe (Metals & Mining)

CMP
Company

(|)

EPS (|)

M Cap
TP (|) Rating

P/E (x)

EV/EBITDA (x)

FY16 FY17E FY18E

FY16 FY17E FY18E

ROCE(%)

(| Cr)

FY16

FY17E

FY18E

Buy

209672

22.6

24.5

25.4

14.7

13.6

13.1

8.6

7.7

7.3

ROE(%)

FY16 FY17E FY18E FY16 FY17E FY18E

Coal India

332

350

Hindalco Industries

154

135

Sell

31801

1.3

11.8

12.8 121.5

13.1

12.1

10.0

7.0

6.5

4.3

7.0

7.0

0.7

6.0

6.1

Hindustan Zinc

221

200

Hold

93351

19.3

17.2

18.5

12.9

11.9

7.9

7.8

6.4

21.6

20.1

19.5

21.8

17.0

16.5

JSW Steel

50.7

52.5

42.1

45.3

47.8

Sell

41772

57.2

133.7

159.9

30.2

12.9

10.8

13.0

6.9

6.3

4.8

12.6

13.8

6.4

14.2

14.8

102

90

Hold

40341

7.6

7.4

8.7

13.3

13.7

11.6

7.4

7.9

6.3

9.4

9.3

12.0

10.1

9.6

10.9

48

35

Sell

19785

-10.0

2.0

3.7

NA

23.9

13.1

NA

10.4

6.8

-7.9

3.4

5.2 -10.0

2.1

3.8

Vedanta

170

165

Hold

50272

7.3

6.0

15.4

23.3

28.2

11.0

7.5

7.5

5.6

6.5

6.9

10.4

4.8

4.0

9.6

Tata Steel

380

335

Hold

36869

-23.1

24.6

35.7

NA

15.4

10.6

14.8

7.8

6.3

2.1

7.5

9.7

-7.3

7.4

10.0

NMDC
SAIL

1728 1500

11.4

45.0

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 9

RATING RATIONALE

ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com assigns

ratings to its stocks according to their notional target price vs. current market price and then categorises them
as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional
target price is defined as the analysts' valuation for a stock.
Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction;
Buy: >10%/15% for large caps/midcaps, respectively;
Hold: Up to +/-10%;
Sell: -10% or more;

Pankaj Pandey

Head Research

pankaj.pandey@icicisecurities.com

ICICIdirect.com Research Desk,

ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
Mumbai 400 093
research@icicidirect.com

ICICI Securities Ltd | Retail Equity Research

Page 10

ANALYST CERTIFICATION
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about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report.

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