 "Online trading, Trading")
Stocks to buy, Hindalco, Coal India, APL Pollo Tubes
Axis Securities has recommended four stocks with a ‘Buy’ rating from the metals and mining space, following their Q1FY25 results.
In a research note, Axis Securities that steel and non-ferrous companies across the metals and mining segment saw an improvement in earnings before interest tax depreciation and amortisation per ton (EBITDA/t) led by lower coal costs in the first quarter of financial year 2024-25, which offset these companies’ lower operating leverage.
Looking ahead, the brokerage firm expects steel spreads to come under pressure in Q2FY25, which will impact companies operating in the steel space. Here is a list of stocks recommended by Axis Securities:
Hindalco Industries
The brokerage has given a ‘buy’ rating on Hindalco’s stock, with a target price of Rs 715 per share.
The company’s expansion projects, such as the 600 kt Bay Minette (by H2CY26), Copper Inner Grooved Tubes (end of CY24) and downstream Aluminium projects (end of FY26), will lead to an increase in the EBITDA/t from FY27 onwards, as the projects get commissioned and start contributing fully from FY27, the brokerage noted.
While talking about Novelis, a subsidiary of Hindalco, the brokerage firm highlighted the company’s management’s guidance of $525 per tonne EBITDA/t on a sustainable basis.
It added that the company has multiple levers to achieve EBITDA/t towards $600 per tonne in the future.
Coal India
Axis Securities has given a ‘buy’ rating for Coal India’s stock, along with a target price of Rs 575.
Analysts at Axis Securities are upbeat on Coal India, considering the company’s ambitious coal production and off-take targets of of 838/1,000MT for FY25 and FY26.
Additionally, its implementation strategies for the development of coal evacuation infrastructure in the form of First Mile Connectivity (FMC) Projects, Rail projects, and other groundwork like land acquisition to achieve its production target of one billion tonnes by FY26, are also key positives.
Further, the company has a capex plan of Rs 15,500 crore for FY25, and it plans to allocate a significant portion of that towards diversification projects such as solar and thermal power, coal gasification and the revival of fertilizer plants, which are other positives for the mining behemoth.
APL Apollo Tubes
The brokerage has given a ‘buy’ rating on APL Apollo Tubes’ stock, with a target price of Rs 1,650. Axis Securities is bullish on the company’s capacity ramp-up ahead.
JTL Industries
Axis Securities has given a ‘buy’ call on JTL Industries, with a target price of Rs 260. The brokerage is optimistic about the company’s EBITDA/t growth strategy and capacity expansion.
First Published: Aug 23 2024 | 1:53 PM IST
