Result Update February 13, 2015 Rating matrix Rating Target Target Period Potential Upside : : : : Hindalco Industries (HINDAL) Hold | 150 12 months -1% Topline in line, EBITDA, PAT miss estimate… What’s Changed? Target EPS FY15E EPS FY16E EPS FY17E Rating Chnaged from | 148 to | 150 Changed from | 11.4 to | 12.0 Changed from | 19.5 to | 14.3 Introduced at | 17.4 Unchanged Quarterly Performance (Standalone) Revenue EBITDA EBITDA (%) PAT Q3FY15 8,603.0 923.3 10.7 359.4 Q3FY14 7,273.1 629.5 8.7 334.0 YoY (%) 18.3 46.7 208 bps 7.6 Q2FY15 8,554.3 897.0 10.5 78.8 QoQ (%) 0.6 2.9 25 bps 356.2 Key Financials (Cons) | Crore Net Sales EBITDA Net Profit EPS (|) FY14 87695.5 8286.3 2175.0 10.5 FY15E 100766.4 9959.9 2471.3 12.0 FY16E 105550.9 11072.1 2944.3 14.3 FY17E 114369.9 12272.7 3599.6 17.4 Valuation summary P/E (Diluted) Target P/E EV / EBITDA P/BV RoNW RoCE FY14 14.4 14.3 10.0 0.8 5.4 4.5 FY15E 12.7 12.6 8.7 0.7 5.8 5.4 FY16E 10.7 10.6 7.6 0.7 6.5 5.9 FY17E 8.7 8.6 6.9 0.6 7.4 6.4 Stock data Stock Data Market Capitalization Total Debt (FY14) Cash and Investments (FY14) EV 52 week H/L Equity capital Face value | 31553.2 Crore | 63348.4 Crore | 11712.2 Crore | 83021.2 Crore 199 / 97 | 206.5 Crore |1 Price performance (%) Return % Hindustan Zinc Sesa-Sterlite Hindalco Ind 1M 12.3 0.2 -3.3 3M 11.9 -14.7 -0.9 | 152 6M 14.2 -24.4 -19.3 12M 46.6 10.3 43.3 Research Analyst Dewang Sanghavi [email protected] Isha Bansal [email protected] ICICI Securities Ltd | Retail Equity Research • Hindalco reported a mixed set of Q3FY15 (standalone) numbers wherein the operating income was in line with our estimates whereas EBITDA and PAT were below our estimates on account of higherthan-expected other expenses • Hindalco reported total operating income of | 8603.0 crore, up 0.6% QoQ and 18.3% YoY and in line with our estimate of | 8600.1 crore • The company reported a standalone EBITDA of | 923.3 crore (EBITDA margin: 10.7%), up 2.9% QoQ and 46.7% YoY but lower than our estimate of | 968.1 crore (EBITDA margin: 11.3%) • The standalone PAT came in at | 359.4 crore, up 7.6% YoY but below our estimate of | 466.6 crore • Sales volume for Q3FY15 came in at 83 KT for alumina, 202.2 KT for aluminium and 95 KT for copper Production at inflection point for domestic operations 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. On the domestic aluminium business front, the company is undergoing an ambitious capacity expansion wherein its aluminium (primary metal) production capacity is expected to increase from 560 KT currently to 1278 KT by the end of FY15E. Subsequently, we expect domestic aluminium metal production to grow at 19.6% CAGR in FY14-17E. Novelis: Stable performance; improving product mix to aid margins In 2007, Hindalco acquired Novelis for ~US$6.0 billion, including debt in an all-cash transaction. Novelis is one of the world’s leading aluminium rolling and recycling companies supplying premium products (beverage cans, automotive and high-end specialities) in the markets of North America, Europe, Asia and South America. Novelis’ sales volumes are expected to grow at a CAGR of 6.0% in FY14-17E. On the back of increasing share of the automobile segment in the overall sales mix, we expect the EBITDA/tonne to improve from US$289/tonne in FY14 to US$320/tonne by FY15E and further to US$350/tonne in FY16E and FY17E. Miss on operational performance; maintain HOLD!! Hindalco’s Q3FY15 performance came in lower than our estimates on account of higher operating costs. Going forward, we expect domestic operations to report a stable performance while Novelis’ performance is likely to improve, going forward, on account of the increasing share of the high margin automotive segment in the overall product mix. We have valued Hindalco on an SOTP basis, thereby arriving at a target price of | 150. We maintain our HOLD rating on the stock. Variance analysis Q2FY15 QoQ (%) 8,554.3 0.6 223.4 -4.9 Comments Topline came in broadly in line with our estimate Other income came in line with our estimates 15.6 7,657.3 0.3 Manufacturing expense came in higher than our estimate 629.5 46.7 8.7 208 bps 199.8 8.2 165.2 170.9 2.9 25 bps 10.3 16.0 Total Operating Income Other Income Q3FY15 Q3FY15E 8,603.0 8,600.1 212.5 209.4 Q3FY14 7,273.1 204.2 YoY (%) 18.3 4.1 Total Manufacturing Expense 7,679.7 7,632.0 6,643.6 923.3 10.7 216.3 447.5 0.0 472.1 112.7 359.4 968.1 11.3 216.5 377.7 0.0 583.3 116.7 466.6 EBITDA EBITDA Margin (%) Depreciation Interest Exceptional item PBT Tax Outgo PAT Key Metrics Total Copper Production (tonne) Total Aluminium Production (tonne) 95000 98,000 217000 206,000 Novelis, Rolled Product Shipments (Kt) Novelis, EBITDA/tonne (US$/tonne) 757 312 EBITDA came in lower than our estimate on account of higher other expenses EBITDA margins came in lower than our estimate Depreciation came in line with our estimate Interest came in higher than estimate 468.8 134.7 334.0 0.7 -16.3 7.6 897.0 10.5 196.0 385.7 431.2 107.4 28.6 78.8 89000 140000 6.7 55.0 96000 187000 -1.0 16.0 Copper metal production came in lower than our estimate Aluminium metal production came in higher than our estimate 721 270 5.0 15.6 770 316 -1.7 -1.1 Novelis metal sales were lower-than-expected Novelis EBITDA/tonne came in as expected 785 320 339.7 294.1 356.2 PAT came in lower than our estimate on account of lower EBITDA Source: Company, ICICIdirect.com Research Change in estimates (| Crore) Revenue EBITDA EBITDA Margin (%) PAT EPS (|) FY16E Old New % Change 107,038.3 105,550.9 -1.4 11,747.1 11,072.1 -5.7 11.0 10.5 -48 bps 3,645.6 2,944.3 -19.2 17.7 14.3 -19.4 FY17E Old New % Change NA 114,369.9 NA NA 12,272.7 NA NA 10.7 NA NA 3,599.6 NA NA 17.4 NA Comments Downward revised FY16 revenue estimates Downward revised FY16E EBITDA estimates Downward revised FY16 PAT estimates Source: Company, ICICIdirect.com Research Assumptions 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 FY14 330 594 2,895 289 1,774 7108 60 Current FY15E 390 790 3,101 320 1,936 6800 58 FY16E 417 890 3,287 350 1,897 6728 60 Earlier FY15E 390 790 3,101 320 1,959 6800 58 FY16E 417 890 3,287 350 2,100 6728 58 FY17E 430 1,015 3,484 350 1,950 6820 60 Comments Maintained estimates Maintained estimates Maintained estimates Maintained estimates Downward revised aluminium LME prices Maintained estimates Changed FY16 estimates Source: Company, ICICIdirect.com Research ICICI Securities Ltd | Retail Equity Research Page 2 Company Analysis Hindalco is a metal major with business interests in copper smelting & aluminium manufacturing domestically. It is also a leading aluminium converter globally through subsidiary Novelis. HIL also owns 51% of Aditya Birla Minerals (ABML, Australia). Aluminium business leads the way; capacity expansion - key growth driver The company is currently in the midst of an ambitious capacity expansion plan wherein it is planning to expand its aluminium capacity to 1.3 MTPA (0.56 MTPA currently) and alumina capacity to 3.0 MTPA (1.5 MTPA currently). Aluminium capacity expansion is being carried out through two greenfield projects viz. Mahan and Aditya while alumina capacity expansion is being carried out through the Utkal alumina refinery. Exhibit 1: Alumina production Exhibit 2: Aluminium (primary metal) production 3500 2201 2500 1500 1355 1000 2395 800 1631 1319 KT KT 2000 1200 2870 3000 600 790 574 541 594 FY12 FY13 FY14 890 1015 400 1000 500 200 0 0 FY12 FY13 FY14 FY15E FY16E FY17E FY15E FY16E FY17E Source: Company, ICICIdirect.com Research Source: Company, ICICIdirect.com Research On the back of a satisfactory ramp up of new facilities, we expect alumina and aluminium production to grow at a CAGR of 20.7% and 19.6%, respectively, going forward, in FY14-17E. Stable copper business; Tc/Rc likely to remain firm Hindalco’s copper business is predominantly a convertor one and is largely insulated from copper prices. As Hindalco operates custom smelting operations, profits from this part of the business do not really depend on copper prices but on variables such as treatment and refining charges earned and realisations on the sale of by-products. Exhibit 4: Copper division topline and EBIT trend FY15E FY16E FY17E KT 300 200 100 0 Copper cathode production 802 768 882 1400 1200 1000 800 600 400 200 0 | Crore FY14 430 1371 21913 FY13 417 20917 FY12 390 20111 316 330 17849 330 1305 1312 17306 400 | Crore 500 23000 22000 21000 20000 19000 18000 17000 16000 15000 17556 Exhibit 3: Copper production trend FY12 FY13 FY14 FY15E FY16E FY17E Topline (LHS) EBIT (RHS) Source: Company, ICICIdirect.com Research Source: Company, ICICIdirect.com Research Going forward, the company expects Tc/Rc margins to remain robust on account of an increase in global mine metal supply from brownfield and greenfield expansions. ICICI Securities Ltd | Retail Equity Research Page 3 Novelis - global leader; performance par excellence!! Novelis is a subsidiary of Hindalco Industries that converts primary aluminium into rolled aluminium, which is used for manufacturing valueadded products, namely, cans, automobiles, flat sheets, foils, etc. It has an installed capacity of 3 MTPA and has been operating at ~90%+ capacity utilisation rates in the past five financial years. Exhibit 6: Novelis topline, EBITDA & EBITDA/tonne trend 14000 3500 2500 FY12 3484 3287 3101 2786 2750 2895 3000 US$ Million 3250 2838 Tonne (in Kt) 12000 11063 9812 9806 11084 11495 12369 500 400 10000 8000 6000 330 336 320 289 350 300 350 200 4000 100 2000 0 0 FY13 FY14 FY15E FY16E FY12 FY17E Sales Volume (Rolled Products) Source: Company, ICICIdirect.com Research US$/tonne Exhibit 5: Novelis rolled product shipments FY13 FY14 FY15E Sales (LHS) FY16E FY17E EBITDA/tonne (RHS) Source: Company, ICICIdirect.com Research Among major geographies in which Novelis operates (namely North America, Europe, Asia and South America) North America constitutes the majority with share of shipments amounting to ~36% in terms of volume (FY14). Increase in recycle content, focus on automotive segment bodes well Novelis is in the process of expanding its capacity from 3 MTPA to ~3.7 MTPA by FY16E at an estimated capex of ~US$1.5 billion through setting up of new capacity and undertaking de-bottlenecking activity at its principal locations. The capex incurred/to be incurred has been focused on emerging markets, auto industry applications and recycling. Novelis has invested in major recycling initiatives in all four operating regions, thus progressing towards its goal of achieving recycle content of 50% in its products by 2015 and further to 80% by 2020. Novelis performance Novelis, the overseas rolled products manufacturing subsidiary of Hindalco Industries, has announced its Q3FY15 numbers. The total rolled product shipments for Q3FY15 came in at 757 KT, lower than our expectation of 785 KT. Revenue for the quarter stood at US$2.8 billion as compared to US$2.4 billion in Q3FY14, up 18% YoY. The EBITDA for the quarter stood at US$236 million with corresponding EBITDA/tonne at US$312/tonne (I-direct estimate: EBITDA of US$251 million, EBITDA/tonne US$320/tonne). The subsequent net income for the quarter stood at US$46 million. ICICI Securities Ltd | Retail Equity Research Page 4 Outlook and valuation Hindalco’s Q3FY15 performance came in lower than our estimates on account of higher operating costs. Going forward, we expect domestic operations to report a stable performance while Novelis’ performance is likely to improve, going forward, on account of the increasing share of the high margin automotive segment in the overall product mix. We have valued Hindalco on an SOTP basis, thereby arriving at a target price of | 150. We maintain our HOLD rating on the stock. Exhibit 7 : Target price calculation Particulars Indian copper business EBITDA (FY17E, | crore) Australian copper business EBITDA (FY17E, | crore) Value 1627 243 Multiple 5.5 5.5 Indian aluminium business EBITDA (FY17E, | crore) Novelis EBITDA (FY17E, | crore) Total enterprise value (| crore), A FY17E gross debt (| crore), B FY17E cash & cash equivalent (| crore), C FY17E net debt (| crore), D=B-C FY17E minority interest (| crore), E Value of investments (quoted, at 30% discount), F Implied Equity Value, Market Cap (| Crore), H=A-D-E+F+G No.of shares, I Implied target price (|), H/I 3086 7317 6.5 7.0 Enterprise Value 8948 1334 20061 51219 81562 66348 12694 53655 1608 4768 31067 206.5 150 Source: Company, ICICIdirect.com Research Exhibit 8 : Valuation matrix FY14 FY15E FY16E FY17E Sales (| cr) 87695.5 100766.4 105550.9 114369.9 Growth (%) -0.9 14.9 4.7 8.4 EPS (|) 10.5 12.0 14.3 17.4 Growth (%) -10.9 13.6 19.1 22.3 PE (x) 14.4 12.7 10.7 8.7 EV/EBITDA (x) 10.0 8.7 7.6 6.9 RoNW (%) 5.4 5.8 6.5 7.4 Source: Company, ICICIdirect.com Research ICICI Securities Ltd | Retail Equity Research Page 5 RoCE (%) 4.5 5.4 5.9 6.4 Company snapshot 300 250 200 Target Price: 150 150 100 50 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 0 Source: Bloomberg, Company, ICICIdirect.com Research Key events Date/Year 2000 2002 2003 2004 2005 2006 2007 2008 2009 2011 2013 Event Acquisition of a controlling stake in Indian Aluminium Company (Indal, capacity 43000 TPA of primary aluminium metal along with copper smelter) Acquisition of Indo Gulf Corporation's copper business (Birla Copper, capacity 150,000 TPA) Acquisition of Mt Gordon & Nifty copper mines through ABML, brownfield expansion of aluminium smelter at Renukoot raising capacity to 345000 TPA 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 Raises US$600 million through QIP route for projects 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 Source: Company, ICICIdirect.com Research Top 10 Shareholders Shareholding Pattern Rank 1 2 3 4 5 6 7 8 9 10 (in %) Promoter FII DII Others Name Latest Filing Date % O/S Position (m) Change (m) Aditya Birla Group 30-Sep-14 33.14 684.3 0.0 LIC Nomura Mutual Fund Asset Management Company L 30-Sep-14 9.32 192.5 -36.4 Dimensional Fund Advisors, L.P. 31-Dec-14 1.71 35.2 -1.4 Bajaj Allianz Life Insurance Company Limited 30-Sep-14 1.52 31.4 -1.7 Umang Commercial Co., Ltd. 30-Sep-14 1.32 27.3 0.0 BlackRock Institutional Trust Company, N.A. 31-Jan-15 1.23 25.3 2.2 The Vanguard Group, Inc. 31-Jan-15 1.07 22.1 -2.1 Birla Institute of Technology & Science 30-Sep-14 1.05 21.6 0.0 Platinum Investment Management Ltd. 30-Sep-14 1.04 21.5 -8.8 Skagen AS 30-Sep-14 0.92 19.0 19.0 Dec-13 Mar-14 37.0 37.0 26.9 26.9 13.3 14.4 22.8 21.7 Jun-14 37.0 27.6 14.1 21.3 Sep-14 37.0 29.5 11.9 21.7 Dec-14 37.0 28.9 12.7 21.4 Source: Reuters, ICICIdirect.com Research Recent Activity Buys Investor name Skagen AS Franklin Advisers, Inc. ICICI Prudential Asset Management Co. Ltd. TGS Investment & Trade Pvt. Ltd. J.P. Morgan Asset Management (Hong Kong) Ltd. Value 48.05m 17.78m 12.54m 8.91m 8.02m ICICI Securities Ltd | Retail Equity Research Shares 18.98m 6.35m 5.02m 4.49m 3.52m Sells Investor name LIC Nomura Mutual Fund Asset Management Company Ltd. Platinum Investment Management Ltd. Eastspring Investments (Singapore) Limited Waddell & Reed Investment Management Company The Vanguard Group, Inc. Value -92.24m -22.25m -7.77m -4.62m -4.12m Shares -36.44m -8.79m -3.29m -2.46m -2.05m Page 6 Financial summary 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 FY14 87695.5 0.0 87695.5 (0.8) 79409.2 8286.3 5.7 3552.8 2701.6 1017.2 396.0 2653.1 524.9 2128.2 -10.9 46.8 2175.0 2175.0 -28.1 10.5 FY15E 100766.4 0.0 100766.4 14.9 90806.5 9959.9 20.2 4106.8 3346.1 858.2 431.2 2934.0 586.8 2347.2 10.3 124.1 2471.3 2471.3 13.6 12.0 FY16E 105550.9 0.0 105550.9 4.7 94478.8 11072.1 11.2 4477.6 3920.9 850.7 0.0 3524.3 704.9 2819.4 20.1 124.9 2944.3 2944.3 19.1 14.3 FY17E 114369.9 0.0 114369.9 8.4 102097.2 12272.7 10.8 4797.6 3980.9 850.7 0.0 4344.8 869.0 3475.9 23.3 123.7 3599.6 3599.6 22.3 17.4 (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 FY14 2175.0 3552.8 2701.6 -3308.6 6122.1 11242.9 -360.1 -16013.0 -464.3 -16837.4 15.0 6442.3 -2701.6 -241.6 3862.0 -535.7 6840.4 1245.8 3775.5 5021.3 FY15E 2471.3 4106.8 3346.1 -5259.6 3325.5 7990.2 250.0 -7200.0 -197.4 -7147.4 0.0 1000.0 -3346.1 -241.6 0.0 0.0 -2587.7 -1744.9 5021.3 3276.4 FY16E 2944.3 4477.6 3920.9 -829.0 1483.3 11997.1 150.0 -5000.0 -101.1 -4951.1 0.0 1000.0 -3920.9 -241.6 0.0 0.0 -3162.5 3883.5 3276.4 7160.0 FY17E 3599.6 4797.6 3980.9 -4060.5 2734.1 11051.7 150.0 -8000.0 -136.3 -7986.3 0.0 1000.0 -3980.9 -241.6 0.0 0.0 -3222.5 -157.0 7160.0 7002.9 FY14 FY15E FY16E FY17E 10.5 27.7 196.7 1.0 24.3 12.0 31.9 207.5 1.0 15.9 14.3 35.9 220.5 1.0 34.7 17.4 40.7 236.8 1.0 33.9 9.4 3.0 2.5 66 41 66 9.9 2.9 2.5 69 38 85 10.5 3.3 2.8 70 39 82 10.7 3.8 3.1 70 40 82 8.6 5.3 9.1 5.4 4.5 6.1 5.8 5.4 6.5 6.5 5.9 7.0 14.4 10.0 0.9 0.4 0.8 12.7 8.7 0.9 0.3 0.7 10.7 7.6 0.8 0.3 0.7 8.7 6.9 0.7 0.3 0.6 7.6 1.6 1.4 0.8 6.5 1.5 1.4 0.8 5.9 1.4 1.5 0.9 5.4 1.4 1.5 0.9 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 FY14 FY15E FY16E FY17E 206.5 40392.8 40604.9 63348.4 3188.9 2938.8 110081.0 206.5 42622.6 42834.6 64348.4 3188.9 2881.6 113253.4 206.5 45325.3 45537.4 65348.4 3188.9 2823.5 116898.2 206.5 48683.3 48895.4 66348.4 3188.9 2766.6 121199.3 87669.2 24777.3 62891.9 21331.1 12961.1 16694.3 9234.8 6994.5 2086.2 5021.3 40031.0 20362.6 7552.2 27914.8 12116.2 780.7 110081.0 102669.2 28884.0 73785.2 13531.1 12711.1 19325.1 10766.8 7759.0 2418.4 3276.4 43545.7 22637.9 8602.4 31240.4 12305.4 920.8 113253.5 111940.2 33361.6 78578.5 9260.1 12561.1 20242.6 11567.2 6860.8 2427.7 7160.0 48258.3 23712.8 9010.9 32723.7 15534.6 963.8 116898.1 119940.2 38159.3 81780.9 9260.1 12411.1 21934.0 13160.4 7434.0 2630.5 7002.9 52161.8 25694.1 9763.7 35457.8 16704.0 1043.2 121199.4 Source: Company, ICICIdirect.com Research Key ratios (Year-end March) Per share data (|) Adj 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 7 ICICIdirect.com coverage universe (Metals & Mining) CMP Company Coal India (|) 350 EPS (|) M Cap TP (|) Rating 360 Hold P/E (x) EV/EBITDA (x) FY14 FY15E FY16E FY14 FY15E FY16E FY14 FY15E FY16E FY14 FY15E FY16E 27.8 14.6 14.8 12.6 10.6 32.8 (| Cr) FY14 FY15E FY16E 221060 23.9 23.7 9.7 ROCE(%) 8.1 29.7 ROE(%) 26.2 35.6 30.8 30.7 Hindalco Industries 153 150 Hold 31553 10.5 12.0 14.3 14.4 12.7 10.7 10.0 8.7 7.6 5.3 4.5 5.4 8.6 5.4 5.8 Hindustan Zinc 160 192 Buy 77191 16.4 19.4 19.5 9.7 8.3 8.2 6.0 5.2 4.6 16.5 14.6 12.8 18.5 18.7 16.5 JSW Steel 990 1,025 Hold 23930 89.6 102.5 90.7 11.1 9.7 10.9 6.3 5.9 6.4 10.6 11.2 9.5 9.9 10.3 8.5 NMDC 139 175 Buy 55272 16.2 17.2 15.5 8.6 8.2 9.0 4.7 4.3 5.4 25.4 25.2 22.2 21.4 20.6 17.5 SAIL 73 90 Hold 30235 6.3 8.6 12.3 13.4 9.9 6.9 14.1 8.4 6.9 3.6 7.1 8.7 6.3 8.1 10.7 Sesa Sterlite 208 213 Hold 61746 21.2 24.0 22.5 12.0 10.6 11.3 7.1 5.2 5.4 8.8 10.9 9.4 8.6 9.0 7.9 Tata Steel 365 375 Hold 35456 37.3 22.5 25.8 9.5 15.7 13.7 6.3 7.7 7.1 8.7 6.5 6.8 8.5 4.9 5.4 Source: Company, ICICIdirect.com Research ICICI Securities Ltd | Retail Equity Research Page 8 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 [email protected] ICICIdirect.com Research Desk, ICICI Securities Limited, 1st Floor, Akruti Trade Centre, Road No 7, MIDC, Andheri (East) Mumbai – 400 093 [email protected] ICICI Securities Ltd | Retail Equity Research Page 9 Disclaimer ANALYST CERTIFICATION We /I, Dewang Sanghavi, MBA (FIN) and Isha Bansal, MBA (FIN) research analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views 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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