Hindalco: Dead Cat Bounce Is Over For Metals ?

Hindalco has to stay over 86-96 for any further strength;

Otherwise it will be weak and below 83-77 may fall towards 55-40 area

Last two month's Chinese trade data may be an indication of more pain 
in the metals, despite Chinese Lunar New Year holiday factor 

On the ground, there is no visible improvements of demands in steel/metals

despite hopes of more Chinese stimulus

With TTM EPS at 1.99, Hindalco may be quoting at an exorbitant PE of 40;

whereas 15-20 may be more reasonable PE in the current situation 

despite protection by the Govt

Trading Idea:

LTP: 83

Either sell below 83 or on rise around 86-90;

TGT: 77-68-55*-40 (1-3M)

TSL> 93-96

Note: Consecutive closing (3 days) above 96 for any reason, Hindalco may further rally up to 112*-120-130-142 in the mid to long term (alternative bullish case scenario).

As par BG metrics & current market scenario:

(based on standalone TTM & FWD EPS)

Current median valuation of Hindalco may be around: 58 (FY:15/TTM)

Projected fair valuation might be around: 46-50-55 (FY:16-18/FWD)

 

SCRIP	EPS(TTM)	BV(Act)	P/E(AVG)	Low	High	Median	200-DEMA	10-DEMA
HINDALCO	1.99	180.41	20	59.75	54.35	57.05	89.69	74.21

HINDALCO

1.72

184.05

15

48.10

43.76

45.93

89.69

74.21

HINDALCO

1.98

187.75

15

51.61

46.95

49.28

89.69

74.21

HINDALCO

2.4

191.5

15

56.82

51.69

54.26

89.69

74.21

  
Analytical Charts: