Hindalco Q3 Results: Novelis, India Rebound Drive 76% Surge In Profit
A man pulls out an aluminum pipe made by Hindalco Industries at a shop in an old section of New Delhi, India. (Photographer: Amit Bhargava/Bloomberg)

Hindalco Q3 Results: Novelis, India Rebound Drive 76% Surge In Profit

Hindalco Industries Ltd. reported better-than-estimated earnings, aided by best-ever quarterly performance of Novelis and a rebound in India.

Net profit of the billionaire Kumar Mangalam Birla-controlled aluminium producer jumped 76% over a year earlier to Rs 1,877 crore in the third quarter ended December, according to an exchange filing on Tuesday. The analyst estimates compiled by Bloomberg had pegged the bottom line at Rs 983 crore.

Revenue rose 20% to Rs 34,958 crore against the estimated Rs 19,671.7 crore.

  • Earnings before interest, tax, depreciation and amortisation (net of GAAP adjustments) rose 50% year-on-year to Rs 5,521 crore, higher than the estimated Rs 3,079 crore.

  • Margin improved to 15.8% from 12.6%.

  • Net income from operations of its subsidiary Novelis jumped 64% over a year earlier. Ebitda rose 51.7% to Rs 3,711 crore.

  • Aluminium division’s operating income grew 26%.

  • Copper division’s operating income, however, fell 21.1% to Rs 202 crore.

“Our Q3 results flag a return to business at pre-Covid levels with resurgent demand globally. Novelis achieved record shipments, driven by strong demand across product end markets. The India business delivered an excellent performance with aluminium value-added products continuing to record higher volumes”.
Satish Pai, Managing Director, Hindalco

Other Highlights

  • The company flagged off a 34,000-tonne per annum aluminium extrusion project in Silvassa at an investment of Rs 730 crore.

  • Utkal Alumina’s capacity expansion of 500 kilotonnes expected to be commissioned in Q1 FY22.

  • The consolidated net debt-to-Ebitda ratio improved to 3.09x as on Dec. 31, 2020, from a peak of 3.83x as on June 30.

Outlook

Hindalco plans to announce capital allocation framework for Novelis and itself in the coming two weeks, Pai told BloombergQuint in an interview. This, he said, would include cash from operations, growth capex, deleveraging and dividend available to investors.

Pai sees a 2-3% sequential increase in cost of production for the aluminium division, beginning third quarter, on higher coal prices. He also expects higher volume and better performance from the copper division in the ongoing quarter.

Some other highlights

  • Full impact of Utkal Alumina Refinery commissioning would reflect into financials by Q2-Q3 FY22

  • Cost of Utkal is half the amount of Renukoot

  • The company has hedged lower amount of aluminium, nearly 27% at $1,840/tonne, given the upward commodity cycle for the next financial year

Watch the full interview here:

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