Shares of Hindalco Industries rallied over 5 percent to a 52-week high of Rs 294.50 apiece in early trade on Thursday after the company reported strong earnings for the third quarter of fiscal 2021.

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The company’s net profit in Q3FY21 rose 76.2 percent to Rs 340 crore from Rs 193 crore in the year-ago quarter led by better product mix, lower input costs and stability in operations. Standalone revenue during the quarter increased 11 percent to Rs 11,351 crore from Rs 10,230 crore led by higher volumes.

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Hindalco Q3 standalone net profit rises 76% YoY to Rs 340 crore; revenue up 11%

On the operational front, EBITDA rose 16.7 percent to Rs 1,182 crore from Rs 1,013 crore, while EBITDA margin expanded by 50 bps to 10.4 percent from 9.9 percent, YoY.

On a consolidated basis, Hindalco’s business EBITDA stood at Rs 5,242 crore, up 40 percent from Rs 3,733 crore, YoY, driven by the best-ever quarterly performance by Novelis and a sharp recovery in all relevant markets in India aluminium business

Hindalco’s consolidated net debt to EBITDA ratio improved to 3.09x on December 31, 2020, from a peak of 3.83x on June 30, 2020.

Brokerage firm JP Morgan said that the company’s strong earnings were driven by Novelis and aluminium business and believes it is well-positioned to benefit from improving aluminium demand.

The brokerage increased EPS estimates by 2-18 percent over FY21- 23. It maintained an Overweight rating with a target price of Rs 335 per share.

CLSA said that the Hindalco’s Q3 results were largely in line and deleveraging was on track. Capital allocation will be the next trigger and risk-reward was attractive at current levels, it added.

CLSA maintained a Buy call on the stock with a target price of Rs 330 per share.

At 10:20 am, the shares of Hindalco Industries were trading 3.62 percent higher at Rs 289.45 apiece on the BSE as compared to a 0.30 percent gain on the benchmark Sensex.

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