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Prabhudas Lilladher Report
Hindalco Industries Ltd. reported Q2 FY22 Ebitda above our/consensus estimates by 15%/20% at Rs 36.0 billion.
Beat was primarily driven by better than expected margins in aluminium operations.
Hindalco's Novelis’ adjusted Ebitda grew 9% QoQ to $553 million (our estimate: $540 million) with expansion in Ebitda/tonne by 9% at $571.
Admittedly, domestic aluminium earnings would be soft in Q3 due to sharp increase in costs and flat London Metal Exchange. However, pressure on costs would start easing in Q4 FY22 with increase in share of linkage coal and fall in carbon costs.
Novelis would continue to post elevated margins on back of expansion in scrap spreads, increase in share of auto volumes (with ease in chip shortage) and continued growth in beverage cans and specialty products.
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