Hindalco's record profitability and 400% dividend keep investors excited

Hindalco Industries shares jumped on Friday, a day after the metal company reported a set of quarterly earnings driven by the exceptional performance of its India business. The company said favourable macroeconomic conditions, a strategic product mix and improvement in its downstream business boosted its earnings.

Hindalco shares rose by as much as Rs 19.1 or 4.7 percent to Rs 426.9 apiece on BSE, extending gains to the third day in a row.

On Thursday, Hindalco Industries reported a 100 percent year-on-year jump in its consolidated net profit to Rs 3,851 crore for the January-March period.

Its revenue increased 37.7 percent on year, boosted by elevated prices of aluminium and copper prices on the London Metal Exchange.

“With record profitability in the fourth quarter, we had a very good end to the year and we attribute Hindalco’s highest-ever profits not just to strong macros, but also our consistent focus on operational excellence and cost optimisation”, said Satish Pai, Managing Director, Hindalco.

The company's board recommended a dividend of 400 percent (Rs 4 per share) for the year ended March 2022, as against 300 percent (Rs 3 per share) for the previous year.

Brokerage Prabhudas Lilladher upgraded Hindalco shares to 'accumulate' citing recent correction in the valuation, and the company's stable performance in both its India and Novelis operations.

JP Morgan flagged potential policy action on a hike in export duties on aluminium to be an overhang for the stock. The brokerage lowered its target price for the stock by 5.8 percent to Rs 565.

Jefferies maintained a 'hold' rating on the stock with a target price of Rs 440 per share. The brokerage expects the company's EBITDA and EPS to fall 6-13 percent in the year ending March 2023.