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Hindalco Q3 Results: Profit Meets Estimates On Lower Raw Material Costs

Hindalco’s net profit fell 21.9 percent year-on-year to Rs 193 crore in the quarter ended December.

Aluminum billets sit on a cutting machine in a cast house unit. (Photographer: Dhiraj Singh/Bloomberg)
Aluminum billets sit on a cutting machine in a cast house unit. (Photographer: Dhiraj Singh/Bloomberg)

Hindalco Industries Ltd.’s quarterly profit fell despite lower raw material costs. Still, the bottom line met estimates and the operational performance improved.

Net profit fell 21.9 percent year-on-year to Rs 193 crore in the October-December period, the aluminium maker said in an exchange filing. That’s in line with the Rs 193-crore consensus estimate of analysts tracked by Bloomberg. The numbers, however, don’t include earnings from subsidiaries Utkal Aluminia and Novelis.

Hindalco’s bottom line was also impacted by a decline in its other income. The company’s other income fell 49 percent year-on-year to Rs 139 crore in the three months ended December.

Its revenue dropped 14.3 percent over last year to Rs 10,230 crore, also in line with the forecast. That’s because prices of the base metal aluminium fell. Global aluminium prices, according to Hindalco’s investor presentation accompanying the filing, dropped 11 percent year-on-year to $1,754 a tonne.

Earnings before interest, tax, depreciation, and amortisation, however, rose 9.3 percent to Rs 1,013 crore, aided by lower alumina, or raw material, costs. The operating margin expanded to 9.9 percent from 7.7 percent in the year-ago period.

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Revenue from Hindalco’s India business, including Utkal, fell 14 percent year-on-year to Rs 5,467 crore in the quarter ended December, the filing said. That was mainly impacted by lower realisations.

Operating profit of the aluminium segment, including Utkal, fell 17 percent over last year to Rs 1,036 crore. This includes savings of Rs 43 crore on account of regulatory changes related to renewable power obligations—that mandate power utilities to source a pre-determined fraction of their electricity from renewable sources—and Rs 72 crore on account of reversal of provision of such regulatory changes for the first half of FY20, the filing said.

The domestic copper business’ Ebitda, too, slumped 48 percent to Rs 256 crore, hurt by lower volume and realisations.

Shares of Hindalco remained volatile after the results were announced. That compares with a 0.86 percent gain in the Nifty 50 Index.

Hindalco Q3 Results: Profit Meets Estimates On Lower Raw Material Costs