Aditya Birla Group to report mixed bag in 4th quarter

The $28 billion corporation, Aditya Birla Group, whose 50% revenues flow from overseas operations, is expected to report a mixed bag of Q4 FY09 performance in its main businesses that include cement, metals and telecom among others, say experts.

The pre-election spending on infrastructure projects during Q4 has resulted in increased demand for cement in India. Grasim Industries Ltd, on a stand alone basis, is expected to report about 18% y-o-y growth in its EBIDTA in cement business. However, its viscose staple fibre (VSF) business is expected to report a 60% dip in its EBIDTA. This is due to a 30% production cut it had announced in the last quarter at its Nagda (MP) and Kharach (Gujarat) plants, citing global slowdown of economic activity and rising inflation impacting the textile industry. ?Grasim?s depreciation in the fourth quarter is also expected to be high because of its expansion. This, coupled with decline in VSF profitability, will depress the profits of Grasim in Q4,? said a Mumbai-based analyst.

Meanwhile, UltraTech, a wholly owned subsidiary of Grasim Industries is expected to post growth in profit on the backdrop of high volumes, say experts. The diversified group also owns the telecom company, Idea Cellular, where the subscriber growth is expected to result in 46% y-o-y growth in the company?s topline.

Harit Shah, an analyst with Angel Broking, in its report said, ?We estimate Idea?s mobile subscriber base to grow by a robust 64.4% y-o-y and by 15.4% q-o-q to 39.5 million, implying quarterly net additions of 5.3 million.?

However, on account of poor performance at EBIDTA level due to newer circle launches, forex losses and higher depreciation charges, Idea Cellular is expected to report a fall of about 35% in its bottomline, the report adds.

On the other hand, Hindalco, on stand alone basis, is expected to report de-growth in topline due to sharp fall in LME price. The base metal prices were ruling lower by 50% in the fourth quarter on y-o-y basis. Hence, with pressure on prices, the company is also expected to post de-growth in its bottomline. Niraj Shah, an analyst with Centrum said, ?On a stand alone basis, Hindalco is expected to report a dip of 11% y-o-y in topline to about Rs 4,400 crore along with fall in EBIDTA and bottomline by 25% and 65% repectively.?

According to Shah, though slightly compensated by rupee depreciation and increase in copper prices, the sharp fall in aluminium prices will depress its margins during the quarter.

Experts further believe Hindalco, on consolidated basis (including Novelis) could post losses, and witness demand for aluminium rolled products slowing down in North America and Europe.

Sharekhan Investor?s eye, in its report on Aditya Birla Nuvo, expects the value businesses of the company (insulators, textiles, fertilisers, carbon black and rayon) to experience slowdown in sales volume due to weak demand. Though the steep decline in commodity prices is expected to bring down raw material cost, lower volumes and price realisation are likely to adversely affect the margins.

Ups and downs

•Grasim Industries Ltd, on a stand alone basis, is expected to report about 18% y-o-y growth in its EBIDTA in cement business

•UltraTech, a wholly owned subsidiary of Grasim Industries, is expected to post growth in profit on the backdrop of high volumes

•Viscose staple fibre business is expected to report a 60% dip in its EBIDTA