Shares of Hindalco Industries rose 5% in early trading on November 14, even as the company reported lower earnings for its September quarter.

Hindalco Industries reported on November 11 that consolidated net profit for the quarter ending September 30, 2022, fell 36% to Rs 2,205 crore from Rs 3,427 a year earlier due to lower aluminium prices and higher input costs.

Profits subsequently fell 46% from Rs 4,119 crore, the highest quarterly profit for April-June. The consolidated revenue of Aditya Birla Group companies rose 18% year-on-year to Rs 56,176 crore from Rs 47,665 crore a year ago. Subsequently, revenue fell slightly by 3% from Rs 58,018 crore.

Management said Novelis’ EBITDA could hit around $525/t in about two quarters, at which point most contracts will be renewed; however, it faces headwinds in the near term due to lower metal spreads.

In the short term, we note that the current level of the LME reflects pessimism in the macro environment, including a slowdown in China, a recession in Europe and rising inflation in the US, which could weigh on growth.

Motilal Oswal improved their FY23/FY24 EBITDA by 8%/15%, mainly driven by 54%/58% growth in India. So, our consolidated PAT grew 13%/23% in FY23/FY24.

We maintain our BUY rating with a revised SoTP-based target price of Rs 520 (previously INR 480). China remains a major risk for the industry.

JPMorgan maintained its “overweight” call on the stock and lowered its target price to Rs 520 a share from Rs 560 apiece. In the short term, LME aluminium inventories should move higher, while Novelis margins are less predictable in the medium term. Quiet Q2FY22 with lower Indian aluminium.

According to CNBC-TV18, we have lowered our FY23 EPS forecast by 17% and FY24-25 EPS forecast by 9-10%. At 9:37 am, Hindalco Industries was quoted at Rs 449.90, up Rs 20.15, or 4.69%.