J.P. Morgan upgrades Hindalco to 'overweight' from 'neutral'

J.P. Morgan has upgraded Hindalco to 'overweight' from 'neutral' and cut the target price to 170 rupees from 230 rupees, citing sharp under performance versus peers in 2011 and increasing proportion of cash flows from non-aluminium business. "We believe post the turnaround at the 100 (percent) owned US subsidiary Novelis, (Hindalco) is not a pure aluminum play, with (London Metal Exchange) linked prices accounting for only 29 (percent) of (operational profit)compared to FY09 when they stood at 78 (percent)," said J.P. Morgan. "We believe (even) Novelis can deliver $1 billion adjusted (operational profits) even in weak economic conditions," added the bank. The cut in target price reflects a lower mutiple for Hindalco's India business, it says. At 10:28 a.m. shares of Hindalco were trading at 127.55 rupees, up 1.33 percent.