1. 4QFY2010 Result Update I Base Metals
May 28, 2010
Hindalco BUY
CMP Rs151
Performance Highlights Target Price Rs 208
Hindalco’s subsidiary, Novelis, reported strong set of numbers for 4QFY2010. Investment Period 12 month
Top-line grew 24.8% yoy and 14.6% qoq to US $2,420mn as sales volume
grew 16.1% yoy and 10.7% qoq to 716kt. Adjusted EBITDA spiked 336% yoy Stock Info
and 16% qoq to US $231mn. The company reported Net Loss of US $1mn Sector Base Metals
v/s a Loss of US $16mn in 4QFY2009. Following expiry of Novelis’s metal
price ceiling contracts and expected benefit from the price increases and cost Market Cap (Rs cr) 28, 842
savings measures we maintain our Buy recommendation on the stock. Beta 1.7
Strong 4QFY2010 performance by Novelis: Novelis reported a 24.8% yoy 52 WK High / Low 188/68
and 14.6% qoq increase in Top-line to US $2,420mn. Sales volume increased
Avg. Daily Volume 24,82,110
by 16.1% yoy and 10.7% qoq to 716kt . On a yoy basis, all regions registered
a sharp increase in volumes ranging from 5-50%. On a qoq basis, volumes Face Value (Rs) 1
except for Asia grew by 3-23% (3Q tends to be the weakest quarter in North
BSE Sensex 16,863
America and Europe). In Asia, volumes fell 3% qoq due to the Lunar holidays
in China. Adjusted EBITDA increased 336% yoy and 16% qoq to Nifty 5,067
US $231mn as Adj. EBITDA/tonne increased to US $323 (US $291 in
3QFY2010 and US $81 in 4QFY2009). Reuters Code HALC.BO
Bloomberg Code HNDL@IN
Focus on increasing capacity: Novelis is focusing on increasing its capacity in
the emerging markets. The company has announced plans of expanding Shareholding Pattern (%)
capacity by 50% in Brazil at an investment of US $300mn, benefits of which
Promoters 32.1
are to be seen in FY2013E. Further, management has also indicated that it is
looking for investment opportunities in Asia to capitalise on the growing MF/Banks/Indian FIs 19.8
demand.
FII/NRIs/OCBs 39.7
Outlook and Valuation: At the CMP of Rs151, the stock is trading at 5.7x
Indian Public 8.4
FY2011E and 5.4x FY2012E EV/EBITDA. Following expiry of Novelis’s metal
price ceiling contracts and expected benefit from the price increases and cost Abs. (%) 3m 1yr 3yr
saving measures, we maintain our Buy recommendation on Hindalco, with a
SOTP Target Price of Rs208. Sensex 2.6 18.0 17.1
Hindalco (6.5) 84.9 15.3
Key Financials (Consolidated)
Y/E March (Rs cr) FY2009 FY2010E FY2011E FY2012E
Net Sales 65,415 60,712 63,898 67,521
% chg 9.6 (7.2) 5.2 5.7
Net Profit 485 2,987 3,664 3,890
% chg (79.7) 515.5 22.7 6.2
EPS (Rs) 2.9 15.6 19.1 20.3
OPM (%) 4.6 13.4 13.0 13.8
P/E (x) 52.8 9.7 7.9 7.4
Paresh Jain
P/BV (x) 1.6 1.4 1.2 1.0
Tel: 022 – 4040 3800 Ext: 348
RoE (%) 2.9 16.1 15.9 14.6 E-mail: pareshn.jain@angeltrade.com
RoCE (%) - 10.9 10.6 10.2
Pooja Jain
EV/Sales (x) 0.7 0.8 0.7 0.7
Tel: 022 – 4040 3800 Ext: 311
EV/EBITDA (x) 16.0 5.8 5.7 5.4
E-mail: pooja.j@angeltrade.com
Source: Company, Angel Research
1
Please refer to important disclosures at the end of this report Sebi Registration No: INB 010996539

2. Hindalco I 4QFY2010 Result Update
Exhibit 1: Novelis: 4QFY2010 Performance
(US $mn) 4QFY10 4QFY09 % yoy FY10 FY09 % yoy
Net Revenue 2,420 1,939 24.8 8,673 10,177 (14.8)
Cost of goods sold 2,141 1,606 33.3 7,190 9,251 (22.3)
(% of Net Sales) 88.5 82.8 82.9 90.9
Gross Profit 279 333 (16.2) 1,483 926 60.2
(% of Net Sales) 11.5 17.2 17.1 9.1
Selling and Administrative exp. 100 73 37.0 360 319 12.9
(% of Net Sales) 4.1 3.8 4.2 3.1
Research and Development expenses 11 8 37.5 38 41 (7.3)
(% of Net Sales) 0.5 0.4 0.4 0.4
EBITDA 168 252 (33.3) 1,085 566 91.7
EBITDA margin (%) 6.9 13.0 12.5 5.6
Restructuring charges 7 81 (91.4) 14 95 (85.3)
Depreciation 99 109 (9.2) 384 439 (12.5)
Other Income/(Expense) 4 (33) 25 (86)
EBIT 62 62 687 32
(% of Net Sales) 2.6 3.2 7.9 0.3
Net Interest expense 41 43 (4.7) 164 168 (2.4)
Unrealised Gain/(loss) on derivative 2 (40) 194 (556)
Exceptional items 0 122 0 (1,218)
Profit before tax 27 68 (60.3) 742 (1,996) -
(% of Net Sales) 1.1 3.5 8.6 (19.6)
Taxes 15 83 (81.9) 262 (246) -
(% of PBT) 55.6 122.1 35.3 12.3
PAT 12.0 (15.0) - 480 (1,750) -
(% of Net Sales) 0.5 (0.8) 5.5 (17.2)
Profit from Associates (3) (6) - (15) (172) -
Minority Interest (10) 5 - (60) 12 -
Net Income (1) (16) - 405 (1,910) -
Source: Company, Angel Research
Key Concall takeaways
 Capacity utilisation is Asia and South America was more than 100%. While
Europe witnessed average utilisation rate of close to 100% (after closure of
Rogerstone plant which is being shifted to India), North America suffered from
over capacity. The company expects demand supply balance to be restored by
3QFY2011E.
 FY2011E is likely to register volume growth of around 5% over FY2010E due to
debottlenecking.
 The company incurred capex of US $101mn in FY2010. It proposes to increase
capex to US $250mn for FY2011E, with maintenance capex of
US $250mn
 Novelis expects Adj. EBITDA to exceed US $1bn, though the time frame was not
specified.
May 28, 2010 2

3. Hindalco I 4QFY2010 Result Update
Exhibit 2: Shipments across geographies
(Kt) 4QFY2010 4QFY2009 % yoy 3QFY2010 % qoq
Total Sales 756 651 16.1 683 10.7
North America 282 256 10.2 254 11.0
Europe 250 219 14.2 204 22.5
Asia 130 87 49.4 134 (3.0)
South America 94 89 5.6 91 3.3
Source: Company, Angel Research
Exhibit 3: Average Realisation across geographies
(US $/tonne) 4QFY2010 4QFY2009 % yoy 3QFY2010 % qoq
Average Realisation 3,201 2,978 7.5 3,092 3.5
North America 3,252 3,273 (0.7) 3,094 5.1
Europe 3,400 3,059 11.1 3,554 (4.3)
Asia 3,100 2,575 20.4 2,910 6.5
South America 2,734 2,326 17.6 2,582 5.9
Source: Company, Angel Research
Outlook and Valuation
At the CMP of Rs151, the stock is trading at 5.7x FY2011E and 5.4x FY2012E
EV/EBITDA. Following expiry of Novelis’s metal price ceiling contracts and expected
benefit from the price increases and cost saving measures, we maintain our Buy
recommendation on Hindalco, with a SOTP Target Price of Rs208.
Exhibit 4: SOTP Valuation
FY2012E Multiple EV Stake Attributable Value
EBITDA (Rs cr) (x) (Rs cr) (%) EV (Rs cr) (Rs/share)
Hindalco (Standalone) 4,380 6.5 28,471 100 28,471 149
Novelis 4,945 5.5 27,196 100 27,196 142
Total EV 55,667 291
Less: Net Debt
18,380 95
(FY11E)
Value of Investments
2,280 12
@25% discount
Value per share 208
Source: Angel Research
Key risks to our call: 1) Significant movement in metal prices, 2) Adverse exchange
rate movements, and 3) Delay in completion of expansion projects.
May 28, 2010 3

4. Hindalco I 4QFY2010 Result Update
Exhibit 5: 1-year forward EV/EBITDA
(Rs mn)
140,000
120,000 14x
100,000
11x
80,000
8x
60,000
40,000 5x
20,000 2x
0
Apr-06 Apr-07 Apr-08 Apr-09 Apr-10
Source: Company, Angel Research
Exhibit 6: 1-year forward P/E
(Rs)
1,000
900
800
700 35x
600
500 25x
400
300 15x
200
100 5x
0
Apr-06 Apr-07 Apr-08 Apr-09 Apr-10
Source: Company, Angel Research
Exhibit 7: 1-year forward P/BV
(Rs)
300
250
1.7x
200
150 1.2x
100 0.7x
50
0.2x
0
Apr-06 Apr-07 Apr-08 Apr-09 Apr-10
Source: Company, Angel Research
May 28, 2010 4

5. Hindalco I 4QFY2010 Result Update
Exhibit 8: Premium/Discount in Hindalco P/E v/s Sensex P/E
200
150
100
(%)
50
0
(50)
(100)
Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10
Premium/Discount to Sensex Avg. Historical Premium
Source: Company, Angel Research
May 28, 2010 5

6. Hindalco I 4QFY2010 Result Update
Profit & Loss Statement (Consolidated) Rs crore
Y/E March FY2007 FY2008 FY2009 FY2010 FY2011E FY2012E
Net Sales 19,059 59,696 65,415 60,712 63,898 67,521
Other operating income 257 317 211 128 110 110
Total operating income 19,316 60,013 65,625 60,840 64,008 67,631
% chg 60.5 210.7 9.4 (7.3) 5.2 5.7
Total Expenditure 14,886 53,378 62,648 52,723 55,675 58,306
EBITDA 4,431 6,635 2,977 8,117 8,333 9,325
% chg 55.7 49.8 (55.1) 172.6 2.7 11.9
(% of Net Sales) 23.2 11.1 4.6 13.4 13.0 13.8
Depreciation 865 2,457 3,038 2,496 2,294 2,789
EBIT 3,566 4,179 (60) 5,621 6,040 6,536
% chg 74.0 17.2 - - 7.4 8.2
(% of Net Sales) 18.7 7.0 (0.1) 9.3 9.5 9.7
Interest & other Charges 313 1,849 1,232 1,059 1,157 1,326
Other Income 409 656 688 379 400 400
(% of PBT) 11.2 22.0 (113.7) 7.7 7.6 7.1
Share in profit of Associates - - - - - -
Recurring PBT 3,662 2,985 (605) 4,941 5,282 5,610
% chg 80.5 (18.5) (120.3) (916.8) 6.9 6.2
Extraordinary Inc/(Expense) - - - - - -
PBT (reported) 3,662 2,985 (605) 4,941 5,282 5,610
Tax 958 362 (954) 1,597 1,505 1,608
(% of PBT) 26.2 12.1 - 32.3 28.5 28.7
PAT (reported) 2,703 2,624 349 3,344 3,777 4,002
Add: Share of earnings of
(0.5) (15.9) (35.3) (71.4) - -
associate
Less: Minority interest (MI) (16.1) (220.6) 171.8 (285.7) (112.5) (112.5)
Extraordinary Expense/(Inc.) - - - - - -
PAT after MI (reported) 2,686 2,387 485 2,987 3,664 3,890
ADJ. PAT 2,686 2,387 485 2,987 3,664 3,890
% chg 70.3 (11.1) (79.7) 515.5 22.7 6.2
(% of Net Sales) 13.9 4.0 0.7 4.9 5.7 5.8
Basic EPS (Rs) 26.7 20.5 3.2 16.5 19.1 20.3
Fully Diluted EPS (Rs) 25.8 19.5 2.9 15.6 19.1 20.3
% chg 60.9 (24.4) (85.3) 447.0 22.7 6.2
May 28, 2010 6

7. Hindalco I 4QFY2010 Result Update
Balance Sheet (Consolidated) Rs crore
Y/E March FY2007 FY2008 FY2009 FY2010E FY2011E FY2012E
SOURCES OF FUNDS
Equity Share Capital 104 123 170 191 191 191
Reserves & Surplus 12,818 17,085 15,684 21,158 24,554 28,175
Shareholders Funds 12,922 17,208 15,854 21,349 24,745 28,366
Share Warrants - 139 - - - -
Minority Interest 857 1,617 1,287 1,572 1,685 1,797
Total Loans 8,452 32,352 28,310 28,810 30,810 35,810
Deferred Tax Liability 1,171 4,951 2,757 2,757 2,757 2,757
Total Liabilities 23,403 56,267 48,207 54,489 59,997 68,730
APPLICATION OF FUNDS
Gross Block 14,111 34,187 38,332 40,332 42,462 59,092
Less: Acc. Depreciation 5,035 7,373 10,807 13,303 15,596 18,385
Net Block 9,077 26,814 27,525 27,029 26,865 40,706
Capital Work-in-Progress 1,917 2,457 2,949 5,449 9,944 2,939
Goodwill 263 8,833 4,291 4,291 4,291 4,291
Investments 7,875 13,892 10,431 10,431 10,431 10,431
Current Assets 8,668 21,474 19,271 22,083 24,468 26,798
Cash 1,034 1,717 2,192 6,332 8,186 10,006
Loans & Advances 1,151 1,859 1,827 1,821 1,597 1,350
Other 6,483 17,899 15,252 13,930 14,684 15,441
Current liabilities 4,401 17,204 16,260 14,795 16,003 16,435
Net Current Assets 4,267 4,271 3,011 7,288 8,465 10,363
Mis. Exp. not written off 4.2 1.0 0.4 0.4 0.4 0.4
Total Assets 23,403 56,267 48,207 54,489 59,997 68,730
Cash Flow Statement (Consolidated) Rs crore
Y/E March FY2007 FY2008 FY2009 FY2010E FY2011E FY2012E
Profit before tax 3,662 2,985 (605) 4,941 5,282 5,610
Depreciation 865 2,457 3,038 2,496 2,294 2,789
Change in Working Capital (535) 758 2,931 (138) 678 (78)
Less: Other income 24 135 61 - - -
Direct taxes paid 590 935 843 1,597 1,505 1,608
Cash Flow from Operations 3,426 5,400 4,581 5,703 6,748 6,713
(Inc.)/ Dec. in Fixed Assets (2,191) (16,653) (2,890) (4,500) (6,625) (9,625)
(Inc.)/ Dec. in Investments (4,620) (2,150) 4,907 - - -
(Inc.)/ Dec. in loans and
- - - - - -
advances
Other income (416) (731) (910) - - -
Cash Flow from Investing (6,394) (18,072) 2,928 (4,500) (6,625) (9,625)
Issue of Equity 1,871 2,524 5,062 2,777 - -
Inc./(Dec.) in loans 2,202 12,712.3 (9,195) 500.0 2,000.0 5,000.0
Dividend Paid (Incl. Tax) 452 10 353 269 269 269
Others 717 2,312 2,245 71.4 - -
Cash Flow from Financing 2,903 12,915 (6,731) 2,937 1,731 4,731
Inc./(Dec.) in Cash (65) 242 778 4,140 1,855 1,820
Opening Cash balances 1,075 1,467 1,405 2,192 6,332 8,186
Closing Cash balances 1,010 1,709 2,183 6,332 8,186 10,006
May 28, 2010 7

8. Hindalco I 4QFY2010 Result Update
Key Ratios
Y/E March FY2007 FY2008 FY2009 FY2010E FY2011E FY2012E
Valuation Ratio (x)
P/E (on FDEPS) 5.9 7.7 52.8 9.7 7.9 7.4
P/CEPS 4.4 3.8 7.3 5.3 4.8 4.3
P/BV 1.2 1.1 1.6 1.4 1.2 1.0
Dividend yield (%) 1.1 1.2 0.9 0.8 0.8 0.8
EV/Sales 0.8 0.7 0.7 0.8 0.7 0.7
EV/EBITDA 3.6 6.0 16.0 5.8 5.7 5.4
EV/Total Assets 1.7 1.5 1.7 1.7 1.8 1.2
Per Share Data (Rs)
EPS (Basic) 26.7 20.5 3.2 16.5 19.1 20.3
EPS (fully diluted) 25.8 19.5 2.9 15.6 19.1 20.3
Cash EPS 34.0 39.5 20.7 28.7 31.1 34.9
DPS 1.7 1.9 1.4 1.2 1.2 1.2
Book Value 123.9 140.3 93.2 111.6 129.3 148.2
Dupont Analysis
EBIT margin 18.7 7.0 - 9.3 9.5 9.7
Tax retention ratio (%) 73.8 87.9 - 67.7 71.5 71.3
Asset turnover (x) 1.4 2.0 1.5 1.4 1.4 1.3
ROIC (Post-tax) 18.9 12.3 - 8.9 9.5 9.2
Cost of Debt (Post Tax) 4.9 9.5 5.2 4.9 5.5 6.2
Leverage (x) 0.0 1.2 1.4 0.9 0.7 0.8
Operating ROE 19.0 15.8 - 12.3 12.4 11.4
Returns (%)
ROCE (Pre-tax) 17.6 10.5 - 10.9 10.6 10.2
Angel ROIC (Pre-tax) 28.3 15.1 - 14.5 15.9 14.7
ROE 24.1 15.8 2.9 16.1 15.9 14.6
Turnover ratios (x)
Asset Turnover 1.4 2.5 1.8 1.5 1.5 1.3
Inventory (days) 118 76 50 50 50 50
Receivables (days) 30 41 37 40 40 40
Payables (days) 66 72 55 55 60 60
Working capital cycle
66 34 36 35 33 31
(ex-cash) (days)
Solvency ratios (x)
Net debt to equity 0.0 1.2 1.4 0.9 0.7 0.8
Net debt to EBITDA 0.0 3.2 7.3 2.2 2.2 2.3
Interest Coverage 11.4 2.3 - 5.3 5.2 4.9
* Cost of Debt for FY2009 is pretax
May 28, 2010 8

9. Hindalco I 4QFY2010 Result Update
Research Team Tel: 022 - 4040 3800 E-mail: research@angeltrade.com Website: ww.angeltrade.com
DISCLAIMER
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this
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and should consult their own advisors to determine the merits and risks of such an investment.
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may or may not subscribe to all the views expressed within.
Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and trading volume, as
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Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section).
Disclosure of Interest Statement Hindalco
1. Analyst ownership of the stock No
2. Angel and its Group companies ownership of the stock Yes
3. Angel and its Group companies’ Directors ownership of the stock No
4. Broking relationship with company covered No
Note: We have not considered any Exposure below Rs 1 lakh for Angel and its Group companies
Address: Acme Plaza, ‘A’ Wing, 3rd Floor, M.V. Road, Opp. Sangam Cinema, Andheri (E), Mumbai - 400 059.
Tel: (022) 3952 4568 / 4040 3800
Angel Broking Ltd: BSE Sebi Regn No : INB 010996539 / CDSL Regn No: IN - DP - CDSL - 234 - 2004 / PMS Regn Code: PM/INP000001546 Angel Securities Ltd:BSE: INB010994639/INF010994639 NSE:
INB230994635/INF230994635 Membership numbers: BSE 028/NSE:09946
Angel Capital & Debt Market Ltd: INB 231279838 / NSE FNO: INF 231279838 / NSE Member code -12798 Angel Commodities Broking (P) Ltd: MCX Member ID: 12685 / FMC Regn No: MCX / TCM /
CORP / 0037 NCDEX : Member ID 00220 / FMC Regn No: NCDEX / TCM / CORP / 0302
May 28, 2010 9