Hindalco share jumps 5% post Q4; should you buy, hold, or sell?

Shares of Hindalco Industries gained nearly 5% in early trade on Friday after the Aditya Birla Group company reported better-than-expected earnings for the fourth quarter ended March 31, 2022. The country’s leading aluminium and copper manufacturer. It has also declared a dividend of ₹4 per equity share (400% of face value of ₹1 each) for the financial year 2021-22 (FY22). Investors also turned bullish on Hindalco shares after most analysts recommended a “buy” call on the stock post earnings announcement.

Cheering Q4 numbers, Hindalco shares opened higher for the second straight session at ₹422.80, against the previous closing price of ₹407.75 on the BSE. The stock gained momentum and rose 4.7% to hit a high of ₹426.85 apiece in the first hour of trade so far. In comparision, the 30-share benchmark Sensex traded 276 points higher at 54,529 levels.

With a market capitalisation of ₹92,920.59 crore, the largecap stock was trading higher than 5-day moving averages, but lower than 20-day, 50-day, 100-day, and 200-day averages. The stock has declined 3% in a week, 15.5% over a month, and 12.5% in the calendar year 2022 on a year-to-date (YTD) basis. In the last one year, the stock has delivered nearly 8% returns to its shareholders compared with 7% growth in the BSE Sensex.

For Q4 FY22, Hindalco Industries reported a 100% jump in its net profit to ₹3,851 crore, compared to ₹1,928 crore in the same period last year. The Aditya Birla Group flagship company saw its revenue from operations surging 38% to ₹55,764 crore in the March quarter of 2022, against ₹40,507 crore in the corresponding period last year. On the operating front, EBITDA (earnings before interest, taxes, depreciation, and amortisation) rose 30% to ₹7,597 crore during the quarter under review, compared with ₹5,845 crore in Q4 FY21.

As per the company, the strong growth in the top and the bottom line was driven by an exceptional performance in the company's India business. Adding to it, favourable macros, strategic product mix, and an improved downstream business also contributed to the earnings rise.

For Q4FY22, Hindalco’s India business reported a topline of ₹19,628 crore, up 36% YoY and 6% QoQ. For the quarter, Indian aluminium business reported sales volume of 3,36,000 tonnes, while copper business reported a sales volume of 1,05,000 tonnes. Indian business EBITDA (Business segment EBITDA) more than doubled to ₹4,439 crore.

Domestic brokerage house Kotak Securities has recommended a “buy” call on Hindalco Industries with an intraday target price of ₹420. The stock has already achieved the defined target in the early trade today. Motilal Oswal has also affirmed its 'buy' rating with an SoTP-based target price of ₹555 per share.

Global brokerage Macquarie has maintained an 'outperform' rating on the stock with a target at ₹689 per share, while JP Morgan has kept the 'overweight' rating with a reduced target to ₹565 from ₹600 apiece. Among others, Jefferies has maintained the 'hold' rating on the stock and lowered the target to ₹440 per share, while CLSA has affirmed 'buy' rating with a target at ₹580.