X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Hindalco mulls offer for stake in Indal - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Mar 9, 2000

    Hindalco mulls offer for stake in Indal

    Following Alcan’s decision to offload its majority stake in Indian Aluminium (Indal), speculation is rife that Hindalco Limited, India’s largest private sector aluminium producer, is considering a move to bid for the stake. Hindalco has denied any such move.

    Hindalco (FY99 Sales Rs 17,670 m), an Aditya Birla Group Company, is the largest (Installed capacity 242,000 MTPA) and the lowest cost producer of aluminum in the country.

    The decision to pick up a stake in Indal does seem logical given the fact that core competencies of the two companies are complementary. Hindalco has been focussed in the production of aluminium metal and has ventured into downstream products only recently. Indal, on the other hand, has concentrated its efforts in the manufacture of alumina (a large part of which is converted into aluminium by entering into contracts with third party smelters) and downstream products like foils. A merger would create an entity whose operations are well integrated thus creating opportunities for exploiting synergies (for example Indal could then source its aluminium requirements from Hindalco) and scale economies.

    Another implicit benefit of an alliance would be that it would curb the cutthroat competition in the down stream products market. This would result in better realisations for both the companies.

    At current prices, Alcan’s stake in Indal would cost the company Rs 4.5 bn. In view of the ongoing capital expenditure of Rs 18 bn, the total funds requirement would increase dramatically. In such a scenario, Hindalco may have to go in for external funding. In case the company goes in for debt (it had long term debt of Rs 5.3 bn in FY99), its interest burden (Rs 836 m in FY99) would rise dramatically.

    A merger or buyout would be in the best interests of both the companies in view of their complementary core competencies. The benefit of such a deal more than outweigh the downside, which pertain mainly to funding costs.

    Market View:
    Analysts have recommended the stock as a 'BUY' mainly on account of the international and domestic price recovery in aluminum. Moreover, they favor the company's ability to produce aluminum at rates ($941 per ton), that are amongst the lowest in the world.

     

     

    Equitymaster requests your view! Post a comment on "Hindalco mulls offer for stake in Indal". Click here!

      
     

    More Views on News

    Hindalco Industries: Deleveraging Kicks in, One-Offs Hurt the Bottomline (Quarterly Results Update - Detailed)

    Aug 22, 2017

    Hindalco Industries has reported a healthy growth in the topline on the back of Higher volume and realisation for both Aluminium and Copper segments. However, the bottomline declined marginally primarily on the back a provision of Rs 1.04 billion.

    Hindalco: Strong Performance at Operating Level (Quarterly Results Update - Detailed)

    Feb 22, 2017

    Hindalco Industries has reported a 14.5% YoY increase in the topline while the bottomline came at Rs 3.2 billion.

    Hindalco Industries: Strong Operational Performance Boosts Profitability (Quarterly Results Update - Detailed)

    Nov 30, 2016

    Hindalco Industries has reported a 1.1% YoY increase in the topline while the bottomline has accelerated by 255.4% YoY.

    Hindalco Industries: Cost Efficiency Boosts Profitability (Quarterly Results Update - Detailed)

    Aug 18, 2016

    Hindalco Industries has reported a 11.4% YoY decline in the topline while the bottomline has accelerated by 379% YoY.

    Hindalco Industries: A Stellar performance (Quarterly Results Update - Detailed)

    Jun 6, 2016

    Hindalco Industries has reported a 7.5% YoY decline in the topline while the bottomline has accelerated by 123.4% YoY.

    More Views on News

    Most Popular

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process)(The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    HINDALCO SHARE PRICE


    Aug 22, 2017 (Close)

    TRACK HINDALCO

    • Track your investment in HINDALCO with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks

    HINDALCO - RIO TINTO COMPARISON

    Compare Company With Charts

    COMPARE HINDALCO WITH

    MARKET STATS