3QFY2012 Result Update | Base Metals

February 9, 2012

Hindalco
Performance highlights
 

NEUTRAL
CMP Target Price
Novelis (US $mn) yoy % 11.4 (3.3) (165)bp (1.9) 3QFY12 2,880 213 7.4 (12) 3QFY11 2,560 225 (46) yoy % 12.5 (5.3) -

`159 -

Standalone (` cr) Particulars Net sales EBITDA* % margin Adj. PAT 3QFY12 6,590 716 10.9 452 3QFY11 5,918 740 12.5 460

Investment Period
Stock Info Sector Market Cap (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code

8.8 (139)bp

Base Metals 30,393 1.4 225/111 1,253,457 1 17,831 5,412 HALC.BO HNDL@IN

Source: Company, Angel Research; Note: *Adjusted EBITDA for Novelis

For 3QFY2012, Hindalco’s standalone profit declined by 1.9% yoy while Novelis reported a net loss of US$12mn. We recommend Neutral on the stock. Aluminium segment drags standalone profits: Hindalco’s standalone net sales increased by 11.4% yoy to `6,590cr mainly on account of higher volumes in both, aluminium and copper segments. However, aluminium segment EBIT decreased by 33.4% yoy to `310cr due to increase in input costs (mainly coal and crude derivatives). Nevertheless, copper segment EBIT rose by 51.1% yoy to `216cr due to higher treatment and refining charges and by-product credits. Overall, Hindalco’s EBITDA decreased by 3.3% yoy to `716cr. Net profit decreased by 1.9% yoy to `452cr. Low demand in Europe dents Novelis performance: Novelis’ net sales decreased by 4.0% yoy to US$2.5bn due to decrease in volumes as well as aluminium price. Shipments of aluminum rolled products decreased 9.2% yoy to 682kt primarily due to destocking in Europe. Adjusted EBITDA decreased by 10.5% yoy to US$213mn on account of higher costs and lower volumes. Novelis reported a net loss of US$12mn during 3QFY2012 compared to a loss of US$46mn in 3QFY2011. Outlook and valuation: Hindalco is expanding its capacity three-fold over the next four years. However, there is lack of clarity over production from Mahan coal block on account of environmental issues. Without captive coal block, the upcoming Mahan smelter (expected to commission in 1QFY2013) is expected to face cost pressures. Further, lower aluminium prices and higher costs are expected to result in decline in FY2013 PAT by 3.8%. Hence, we recommend Neutral on the stock.

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 32.1 15.5 34.7 17.8

Abs. (%) Sensex Hindalco

3m 2.7

1yr 1.4

3yr 86.0 246.2

18.0 (27.7)

Key financials (Consolidated)
Y/E March (` cr) Net sales % chg Net profit % chg EPS (`) EBITDA margin (%) P/E (x) P/BV (x) RoE (%) RoCE (%) EV/Sales (x) EV/EBITDA (x)
Source: Company, Angel Research

FY2010
60,563 (7.4) 3,925 708.9 20.4 16.1 7.8 1.4 20.9 14.0 0.7 4.2

FY2011
71,801 18.6 2,456 (37.4) 12.8 11.1 12.4 1.0 9.7 9.2 0.6 5.6

FY2012E
78,421 9.2 3,133 27.6 16.4 10.0 9.7 1.0 10.3 7.4 0.6 5.9

FY2013E
81,515 3.9 3,015 (3.8) 15.8 9.9 10.1 0.9 9.1 6.8 0.6 6.1

Bhavesh Chauhan
Tel: 022- 3935 7800 Ext: 6821 bhaveshu.chauhan@angelbroking.com

Please refer to important disclosures at the end of this report

1

Hindalco | 3QFY2012 Result Update

Exhibit 1: 3QFY2012 performance (Standalone)
(` cr) Net sales Raw material % of net sales Power and fuel % of net sales Staff cost % of net sales Other expenses % of net sales Total expenditure % of net sales Operating Income EBITDA % of net sales Interest Depreciation Other income Exceptional Items PBT % of net sales Provision for tax % of PBT PAT
Source: Company, Angel Research

3QFY12 6,590 4,397 66.7 738 11.2 304 4.6 493 7.5 5,932 90.0 57 716 10.9 79 175 90 552 8.4 100 18.2 452

3QFY11 5,918 3,989 67.4 551 9.3 251 4.2 443 7.5 5,234 88.5 57 740 12.5 52 171 61 578 9.8 118 20.4 460

yoy % 11.4 10.2 34.1 20.9 11.3 13.3 58.3 (3.3) 53.8 2.4 48.6 (4.6) (15.2) (1.9)

2QFY12 6,220 4,103 66.0 753 12.1 292 4.7 455 7.3 5,603 90.1 51 669 10.8 68 174 176 604 9.7 101 16.8 503

qoq % 5.9 7.2 (1.9) 4.3 8.3 5.9 10.4 7.0 17.5 0.4 (48.9) (8.6) (0.9) (10.1)

Exhibit 2: Standalone – 3QFY2012 Actual vs. Angel estimates
(` cr) Net sales EBITDA EBITDA margin (%) Adj. net income
Source: Company, Angel Research

Actual 6,590 716 10.9 452

Estimate 5,909 642 10.9 480

Variation (%) 11.5 11.4 (1)bp (5.9)

February 9, 2012

2

Hindalco | 3QFY2012 Result Update

Hindalco (Standalone) – Key result highlights
Hindalco’s standalone net sales increased 11.4% yoy to `6,590cr (above our estimate of `5,909cr) mainly on account of higher volumes in both, aluminium and copper segments. However, aluminium segment EBIT decreased by 33.4% yoy to `310cr due to increase in input costs (mainly coal and crude derivatives). Nevertheless, copper segment EBIT rose by 51.1% yoy to `216cr due to higher treatment and refining charges and by-product credits. Overall, Hindalco’s EBITDA decreased by 3.3% yoy to `716cr and EBITDA margin slipped by 165bp yoy to 10.9% during 3QFY2012. Interest expenses grew by 53.8% yoy to `79cr while other income grew 48.6% yoy to `90cr. Consequently, net profit decreased by only 1.9% yoy to `452cr (below our estimate of `480cr). The company has delayed commissioning of Mahan smelter by a quarter to 1QFY2013. Hindalco’s board has approved the issuance of ~15cr warrants to the promoters on a preferential basis to partly fund its expansion projects.

Segmental performance
Copper cathode and CC rods production grew by 9.4% and 42.3% yoy to 88k and 38k, respectively.

Exhibit 3: Copper – Quarterly production trend
(tonnes) Copper cathodes CC rods* 3QFY11 4QFY11 1QFY12 80,224 84,961 73,192 26,996 33,088 33,701 2QFY12 74,588 33,972 3QFY12 87,748 38,426 yoy % 9.4 42.3 qoq % 17.6 13.1

Source: Company, Angel Research; Note: *Own production

In aluminium segment alumina, aluminium, wire rods and flat products production increased by 7.1%, 7.8%, 6.7% and 20.4% yoy to 343k, 146k, 25k and 56k, respectively.

Exhibit 4: Aluminium – Quarterly production trend
(tonnes) Alumina Aluminium metal Wire rods FRP/foil Extrusions 3QFY11 320,310 135,829 23,672 46,188 9,292 4QFY11 344,077 138,720 23,152 48,218 7,319 1QFY12 334,587 140,387 23,403 49,544 7,321 2QFY12 332,383 143,315 24,442 52,439 7,154 3QFY12 343,086 146,374 25,247 55,598 7,190 yoy % qoq % 7.1 7.8 6.7 20.4 (22.6) 3.2 2.1 3.3 6.0 0.5

Source: Company, Angel Research

February 9, 2012

3

Hindalco | 3QFY2012 Result Update

Exhibit 5: Segmental performance
(` cr) Aluminium Copper Gross revenue Less: Inter-seg. revenue Net sales Aluminium Copper EBIT EBIT margin (%) Aluminium Copper
Source: Company, Angel Research

3QFY11 4QFY11 1QFY12 2QFY12 3QFY12 yoy % qoq % 1,977 4,000 5,977 (2) 5,975 465 143 608 23.5 3.6 2,211 4,637 6,848 (2) 6,846 562 206 768 25.4 4.4 2,093 3,940 6,033 (2) 6,031 599 145 744 28.6 3.7 2,213 4,062 6,275 (3) 6,272 429 148 576 19.4 3.6 2,236 4,418 6,654 6,647 216 13.1 10.5 11.3 11.3 51.1 1.0 8.8 6.0 6.0 46.3 (8.8) -

(7) 272.2 134.0 310 (33.4) (27.7) 526 (13.5) 13.9 4.9 -

The aluminium segment’s EBIT margin stood at 13.9% in 3QFY2012 compared to 23.5% in 3QFY2011. Aluminium segment EBIT decreased by 33.4% yoy to `310cr due to increase in input costs (mainly coal and crude derivatives). The copper segment’s EBIT margin stood at 4.9% in 3QFY2012 compared to 3.6% in 3QFY2011. Copper segment EBIT rose by 51.1% yoy to `216cr due to higher treatment and refining charges and by-product credits.

February 9, 2012

4

Hindalco | 3QFY2012 Result Update

Exhibit 6: Novelis – 3QFY2012 performance
(US $mn) Net revenue Cost of goods sold (% of net sales) Gross profit (% of net sales) SG&A expenses (% of net sales) R&D expenses (% of net sales) EBITDA EBITDA margin (%) Restructuring charges Depreciation EBIT (% of net sales) Other income/(Expense) Net Interest expense Unreal. gain/(loss) on derivative Exceptional items PBT (% of net sales) Taxes (% of PBT) PAT (% of net sales) Less: Profit from associates Less: Minority interest Net income
Source: Company, Angel Research

3QFY12 2,880 2,224 77.2 238 8.3 95 3.3 10 0.3 213 7.4 1 79 53 1.8 (1) 74 (63) (22) (0.8) (10) (12) (0.4) (12)

3QFY11 2,560 2,232 87.2 328 12.8 94 3.7 9 0.4 225 8.8 20 100 105 4.1 (16) 42 30 (74) 3 0.1 33 1,100.0 (30) (1.2) 5 11 (46)

% yoy 12.5 (0.4) (27.4) 1.1 11.1 (5.3) (95.0) (21.0) (49.5) (93.8) 76.2

2QFY12 2,880 2,549 88.5 331 11.5 91 3.2 12 0.4 228 7.9 11 81 136 4.7 4 14 -

% qoq 0.0 (12.8) (28.1) 4.4 (16.7) (6.6) (90.9) (2.5) (61.0)

428.6

-

126 4.4 (7) (5.6) 133 4.6 3 10 120

-

February 9, 2012

5

Hindalco | 3QFY2012 Result Update

Hindalco (Novelis) – Key result highlights
Novelis’ net sales decreased 4.0% yoy to US$2.5bn due to decrease in volumes as well as aluminium price. Shipments of aluminum rolled products decreased 9.2% yoy to 682kt primarily due to destocking in Europe on the back of economic uncertainty and weakness in the electronics business in Asia.

Exhibit 7: Shipment across geographies
(kt) Total sales North America Europe Asia South America 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12 751 267 225 148 111 800 283 258 152 107 767 288 237 152 90 750 276 244 131 98 682 250 202 123 107 yoy % (9.2) (6.4) (10.2) (16.9) (3.6) qoq % (9.0) (9.6) (17.2) (6.3) 9.2

Source: Company, Angel Research

Adjusted EBITDA decreased 10.5% yoy to US$213mn on account of higher costs and lower volumes. Also, EBITDA/tonne declined 1.0% yoy to US$312 during the quarter. Novelis reported a net loss of US$12mn during 3QFY2012 compared to a loss of US$46mn in 3QFY2011. The company is witnessing recovery in demand during 4QFY2012; it remains on track to achieve EBITDA of ~US$1bn during FY2012.

Exhibit 8: Novelis – EBITDA margin trend
350 300 250 200 150 100 50 0 14 12 10 8 6 4 2 0

Exhibit 9: Novelis – Net profit trend
140 120 100 80
(US $ mn)

6 4 2 0
4QFY10 1QFY11 2QFY11 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12 (%)

(US $ mn)

(%)

60 40 20 0 (20) (40) (60)

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

2QFY12

3QFY12

(2) (4)

Adj. EBITDA (LHS)

Adj. EBITDA margin (RHS)

Net profit (LHS)

Net profit margin (RHS)

Source: Company, Angel Research

Source: Company, Angel Research

February 9, 2012

6

Hindalco | 3QFY2012 Result Update

Exhibit 10: Novelis – Adj. EBITDA/tonne trend
350 300 250 400 350 250 200 150 100 50 0 300

200 150 100 50 0

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

2QFY12

Adj. EBITDA
Source: Company, Angel Research

Adj. EBITDA/tonne (RHS)

Investment rationale
Aluminium capacity to increase three folds in the next four years
Hindalco aims to increase its aluminium capacity by almost three-folds in the next four years to 1.5mn tonnes. Consequently, we expect production and sales volume to record significant growth over FY2011–14. Most of these new capacities will be backed by captive bauxite and coal mines; however, there is lack of clarity on production from Mahan coal block on account of environmental issues currently.

February 9, 2012

3QFY12

(US $/tonne)

(US $mn)

7

Hindalco | 3QFY2012 Result Update

Exhibit 11: Expansion projects details
Project Mahan Aluminium, MP Utkal Alumina, Orissa Aditya Aluminium, Orissa Aditya Refinery, Orissa Jharkhand Aluminium Hirakud Canstock Plant Progress Project finance complete; forest clearance for coal block awaited, but applied for tapering linkage Project finance complete Forest stage-II clearance received; Site activities at advanced stage Majority land acquired; construction power line energized Land acquisition started; Water allocated by State government Progressing well Expected completion 1QFY2013 2H CY 2012 Early 2013 2014 2015 Early 2012

Source: Company, Angel Research

Exhibit 12: Smelting capacity to scale up gradually
1,800 1,600 1,400 1,200 1,000 359 359 359 1680

Exhibit 13: Refining capacity to grow 3.0x
5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 1500 1500 3000 4500

(ktpa)

800 600 400 200 0 390

213

(ktpa)
Mahan Aditya Jharkhand Total

Renukhoot Hirakood

0 Existing Utkal Aditya Total

Source: Company, Angel Research

Source: Company, Angel Research

Novelis to expand its capacity
Novelis has plans to increase its capacity by ~20% by FY2014E. Capacity at its Pinda operations in Brazil is being increased by ~220kt by CY2012, while the balance will be through debottlenecking (a 3-4% increase in capacity every year). Further, Novelis plans to invest US$400mn to expand its South Korean aluminum rolling and recycling operations by 1mtpa. We expect steady EBITDA of ~US$1bn per year from Novelis, given its stable conversion business.

February 9, 2012

8

Hindalco | 3QFY2012 Result Update

Exhibit 14: Novelis to generate US$1bn annually
1,100 1,050 14 12 10

(US $ mn)

950 900 850 FY10 FY11 EBITDA FY12E EBITDA margin FY13E

6 4 2 0

Source: Company, Angel Research

Outlook and valuation
We believe Hindalco is well placed to benefit from a) its aluminium expansion plans (capacity increasing by nearly three folds in the next four years), b) low production cost at its new capacities and c) steady capacity expansion at Novelis. However, there is lack of clarity over production from Mahan coal block. Without captive coal block, the upcoming Mahan smelter (expected to commission in 1QFY2013) is expected to face cost pressures. Further, lower aluminium prices and higher costs are expected to result in decline in FY2013 PAT by 3.8%. Moreover, the 18% increase in the stock price over the past three months discounts the near-term growth prospects of Hindalco. We derive a SOTP target price of `152 and recommend Neutral on the stock.

Exhibit 15: SOTP valuation
FY2013 EBITDA (` cr) Hindalco (Standalone) Novelis Total EV Less: Net debt (FY13E) Value of investments @25% discount Value per share
Source: Angel Research

Multiple 6.0 5.5

EV (` cr) 19,539 26,511 46,049 18,827 2,224 152

3,256 4,820

Exhibit 16: EPS - Angel forecast vs. consensus
Year (`) FY12E FY13E
Source: Bloomberg, Angel Research

Angel forecast
16.4 15.8

Bloomberg consensus
16.4 17.0

Variation (%) (0.2) (7.3)

February 9, 2012

(%)

1,000

8

9

Hindalco | 3QFY2012 Result Update

Exhibit 17: EV/EBITDA band
160,000 140,000 120,000 100,000

(`cr)

80,000 60,000 40,000 20,000 0 Apr-06Nov-06Jun-07 Jan-08 Aug-08Mar-09Oct-09May-10Dec-10 Jul-11 Feb-12 2x 5x 8x 11x 14x

Source: Bloomberg, Angel Research

Exhibit 18: P/E band
1,000 900 800 700 600 500 400 300 200 100 0 Apr-06 Nov-06 Jun-07 Jan-08 Aug-08 Mar-09 Oct-09 May-10Dec-10 Jul-11 Feb-12 5x
Source: Bloomberg, Angel Research

(`)

15x

25x

35x

Exhibit 19: P/BV band
350 300 250
(`)

200 150 100 50 0 Apr-06 Nov-06 Jun-07 Jan-08 Aug-08 Mar-09 Oct-09 May-10 Dec-10 Jul-11 Feb-12 0.2x 0.7x 1.2x 1.7x

Source: Bloomberg, Angel Research

February 9, 2012

10

Hindalco | 3QFY2012 Result Update

Exhibit 20: Recommendation summary
Companies CMP Target price Reco. (`) (`) Mcap Upside (` cr) (%) P/E (x) FY13E P/BV (x) FY13E EV/EBITDA (x) FY12E RoE (%) RoCE (%) FY13E FY12E FY13E FY12E FY13E FY12E FY13E

Hindalco
Nalco

159 63 130 146

- Neutral 30,393 53 Sell 16,211 138 Accum. 43,655 - Neutral 61,753

(16) 6 -

9.7 22.9 8.2 11.3

10.1 19.5 7.0
9.6

1.0 1.4 0.9
2.3

0.9 1.3 0.8
1.9

5.9 12.0 3.0
7.5

6.1 9.0 2.4
5.6

10.3 6.2 12.1
22.0

9.1 7.0 12.7
21.3

7.4 3.8 11.3
20.9

6.8 5.3 11.5
20.4

Sterlite Hind. Zinc

Source: Company, Angel Research

February 9, 2012

11

Hindalco | 3QFY2012 Result Update

Profit & Loss Statement (Consolidated)
Y/E March (` cr) Net sales Other operating income Total operating income % chg Total expenditure EBITDA % chg (% of Net sales) Depreciation EBIT % chg (% of Net sales) Interest charges Other income (% of PBT) Share in profit of asso. Recurring PBT % chg Extra. Inc/(Expense) PBT (reported) Tax (% of PBT) PAT (reported) Add: Earnings of asso. Less: Minority interest Extra. Expense/(Inc.) PAT after MI (reported) ADJ. PAT % chg (% of Net sales) Basic EPS (`) Fully Diluted EPS (`) % chg FY2008 FY2009 59,696 317 60,013 210.7 53,378 6,635 49.8 11.1 2,457 4,179 17.2 7.0 1,849 656 22.0 2,985 (18.5) 2,985 362 12.1 2,624 (16) (221) 2,387 2,343 (11.0) 3.9 20.1 19.1 (24.3) 65,415 211 65,625 9.4 62,648 2,977 (55.1) 4.6 3,038 (60) (0.1) 1,232 688 (113.7) (605) (120.3) (605) (954) 349 (35) 172 485 422 (82.0) 0.6 2.8 2.5 (87.0) FY2010 FY2011 60,563 160 60,722 (7.5) 50,976 9,746 227.3 16.1 2,784 6,962 11.5 1,104 323 5.2 6,181 (1,121.7) 6,181 1,829 29.6 4,352 (3) (424) 3,925 3,910 826.2 6.4 22.1 20.4 723.0 71,801 277 72,078 18.7 64,076 8,002 (17.9) 11.1 2,750 5,252 (24.6) 7.3 1,839 431 11.2 3,843 (37.8) 3,843 964 25.1 2,879 (57) (366) 2,456 2,456 (37.2) 3.4 12.8 12.8 (37.2) FY2012E 78,421 233 78,654 9.1 70,851 7,803 (2.5) 10.0 2,923 4,881 (7.1) 6.2 1,194 671 15.4 4,358 13.4 4,358 1,038 23.8 3,320 (187) 3,133 3,133 27.6 4.0 16.4 16.4 27.6 FY2013E 81,515 238 81,753 3.9 73,676 8,077 3.5 9.9 3,148 4,928 1.0 6.0 1,273 719 16.4 4,374 0.4 4,374 1,177 26.9 3,198 (183) 3,015 3,015 (3.8) 3.7 15.8 15.8 (3.8)

February 9, 2012

12

Hindalco | 3QFY2012 Result Update

Balance Sheet (Consolidated)
Y/E March (` cr) SOURCES OF FUNDS Equity share capital Reserves & surplus Shareholders’ funds Share warrants Minority interest Total loans Deferred tax liability Total liabilities APPLICATION OF FUNDS Gross block Less: Acc. depreciation Net Block Capital work-in-progress Goodwill Investments Current assets Cash Loans & advances Other Current liabilities Net current assets Mis. exp. not written off Total assets
34,187 7,373 26,814 2,457 8,833 13,892 21,474 1,717 1,859 17,899 17,204 4,271 1 56,267 38,332 10,807 27,525 2,949 4,291 10,431 19,271 2,192 1,827 15,252 16,260 3,011 0.4 48,207 41,189 16,622 24,567 5,801 4,433 11,246 23,188 2,195 3,117 17,876 18,017 5,172 51,219 39,265 15,801 23,464 13,131 8,941 10,855 27,985 2,556 3,333 22,095 21,684 6,301 62,692 47,265 18,724 28,541 12,430 8,941 10,855 25,116 4,819 1,568 18,729 16,640 8,476 69,244 57,265 21,872 35,393 11,730 8,941 10,855 25,781 4,678 1,630 19,472 17,027 8,754 75,673 123 17,085 17,208 139 1,617 32,352 4,951 56,267 170 15,684 15,854 1,287 28,310 2,757 48,207 191 21,353 21,545 1,737 23,999 3,938 51,219 191 28,832 29,024 2,217 27,692 3,760 62,692 191 31,697 31,888 2,404 31,192 3,760 69,244 191 34,444 34,635 2,586 34,692 3,760 75,673 FY2008 FY2009 FY2010 FY2011 FY2012E FY2013E

February 9, 2012

13

Hindalco | 3QFY2012 Result Update

Cash flow statement (Consolidated)
Y/E March (` cr) Profit before tax Depreciation Change in working capital Others Direct taxes paid Cash flow from operations (Inc.)/ Dec. in fixed assets (Inc.)/ Dec. in investments (Inc.)/ Dec. in loans & adv. Others Cash flow from investing Issue of equity Inc./(Dec.) in loans Dividend paid Others Cash flow from financing Inc./(Dec.) in cash Opening cash bal. Closing cash bal.
FY2008 FY2009 2,985 2,457 758 135 935 5,400 (16,653) (2,150) (731) (18,072) 2,524 12,712.3 10 2,312 12,915 242 1,467 1,709 (605) 3,038 2,931 61 843 4,581 (2,890) 4,907 (910) 2,928 5,062 (9,195) 353 2,245 (6,731) 778 1,405 2,183 FY2010 6,181 2,784 (598) (2,799) 635 4,932 (4,171) (1,614) (348) (5,437) 2,754 (321) 327 1,677 428 (76) 2,263 2,187 FY2011 FY2012E FY2013E 3,843 2,725 (703) 1,675 1,313 6,226 (7,717) 507 (519) (6,691) 10 3,738 384 2,539 825 361 2,186 2,547 4,358 2,923 87 1,038 6,330 (7,300) (7,300) 3,500 269 3,231 2,262 2,556 4,819 4,374 3,148 (418) 1,177 5,928 (9,300) (9,300) 3,500 269 3,231 (140) 4,819 4,678

February 9, 2012

14

Hindalco | 3QFY2012 Result Update

Key ratios
Y/E March Valuation ratio (x) P/E (on FDEPS) P/CEPS P/BV Dividend yield (%) EV/Sales EV/EBITDA EV/Total assets Per share data (`) EPS (Basic) EPS (fully diluted) Cash EPS DPS Book value DuPont analysis EBIT margin Tax retention ratio (%) Asset turnover (x) RoIC (Post-tax) Cost of debt (post tax) Leverage (x) Operating RoE Returns (%) RoCE (Pre-tax) Angel RoIC (pre-tax) RoE Turnover ratios (x) Asset turnover (gross block) Inventory (days) Receivables (days) Payables (days) WC cycle (days) Solvency ratios (x) Net debt to equity Net debt to EBITDA Interest coverage
1.0 2.5 2.3 1.0 5.3 0.5 1.1 6.3 0.5 1.8 2.9 0.5 2.0 4.1 0.6 2.4 3.9 2.5 76 41 72 33 1.8 50 37 55 36 1.5 81 39 83 36 1.8 50 42 50 37 1.8 50 42 50 40 1.6 50 42 50 41 10.5 16.5 15.6 2.6 14.0 21.6 20.9 9.2 15.4 9.7 7.4 12.6 10.3 6.8 11.0 9.1 7.0 87.9 2.2 13.4 8.0 1.0 18.7 (0.1) 1.7 4.1 1.0 11.5 70.4 1.7 13.4 3.0 0.5 18.5 7.3 74.9 1.7 9.1 5.3 0.5 10.9 6.2 76.2 1.5 7.3 3.1 0.5 9.3 6.0 73.1 1.4 6.4 2.8 0.6 8.3 20.1 19.1 39.1 1.9 140.3 2.8 2.5 20.3 1.4 93.2 22.1 20.4 35.0 1.4 112.6 12.8 12.8 27.2 1.4 151.7 16.4 16.4 31.6 1.4 166.6 15.8 15.8 32.2 1.4 181.0 8.3 4.1 1.1 1.2 0.6 5.5 1.4 63.9 7.8 1.7 0.9 0.7 14.3 1.6 7.8 4.5 1.4 0.9 0.7 4.2 1.7 12.4 5.8 1.0 0.9 0.6 5.6 1.9 9.7 5.0 1.0 0.9 0.6 5.9 1.6 10.1 4.9 0.9 0.9 0.6 6.1 1.4 FY2008 FY2009 FY2010 FY2011 FY2012E FY2013E

February 9, 2012

15

Hindalco | 3QFY2012 Result Update

Research Team Tel: 022 - 4040 3800

E-mail: research@angeltrade.com

Website: www.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 document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an investment. Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company 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 opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamentals. The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While Angel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced, redistributed or passed on, directly or indirectly. Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in the past. Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in connection with the use of this information. Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may have investment positions in the stocks recommended in this report.

Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered

Hindalco No No No No

Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors.

Ratings (Returns) :

Buy (> 15%) Reduce (-5% to 15%)

Accumulate (5% to 15%) Sell (< -15%)

Neutral (-5 to 5%)

February 9, 2012

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