Sequential margin expansion in Novelis? Q4 results: Near-term macro concerns may weigh down the stock, and hence we maintain our equal weight (EW) rating on the stock. On the correction, it looks like the Street is not attributing any value to Hindalco?s greenfield projects. We advise investors to ascribe value to these projects?visibility of which has already improved on machinery and power plant order placement ?and we believe any decline would leave enough of a safety margin. The company may miss the tight expectation of completion by FY2012 by a few months.
Novelis? adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) of $236 m was 11% below MSe and up 18% quarter-on-quarter (QoQ). Adjusted Ebitda margin at 9.7% was the highest the company has seen recently. Adjusted profit after tax was $20 m versus $68 m in F3Q10. Unrealised losses on derivatives were $37 m in the quarter. For the full year, the company reported an adjusted Ebitda of $75 m, up 55% year-on-year (YoY) and net income of $405 m compared with the $1.9 bn loss in F2009 (including a $1.3 m goodwill hit), despite a 2% decline in shipments .
Q4 results: Shipments rose to 716 kt, 10% higher QoQ and 10% higher YoY. Shipments to Asia, Europe, and the US rose by 50%, 21% and 11% YoY, respectively, driven by electronics, auto and can sheet/housing industry. Average realisation at $3,380/t rose 4% QoQ and 14% YoY. Revenue, at $2.42 b, was up 15% QoQ and 25% YoY. Adjusted Ebitda per tonne, at $328, improved 7% sequentially on cost control.
?Morgan Stanley