Hindalco ‘cautiously optimistic’ on global markets, aluminium upstream to be tough in Q2

Separately, the company has posted a consolidated net profit of ₹4,119 crore for the quarter ended June.

Hindalco ‘cautiously optimistic’ on global markets, aluminium upstream to be tough in Q2
“On the India side, I am very optimistic as I don't see the country’s market having big issues. As far as Europe and the US are concerned, I am cautiously optimistic,” Hindalco Industries managing director Satish Pai said in an interaction.

Hindalco Industries is cautiously optimistic about the global markets and the business environment in India, while the Aditya Birla Group company’s capex plans for the fiscal would continue unabated.

Separately, the company has posted a consolidated net profit of ₹4,119 crore for the quarter ended June.

“On the India side, I am very optimistic as I don’t see the country’s market having big issues. As far as Europe and the US are concerned, I am cautiously optimistic,” Hindalco Industries managing director Satish Pai said in an interaction.

The green shoots on the domestic front are due to the good monsoons, rebound in the auto sector and the improvement in the overall demand scenario.

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However, Hindalco expects the second quarter to be the “toughest” for its aluminium upstream business.

“This is because a lot of the coal that we bought in May and June will get consumed in the July-September quarter, while the prices on London Metal Exchange (LME) have also come down. The average LME prices in the first quarter stood at $2,800 per tonne, and the average LME prices so far in the second quarter are $2,400. So, the combination of LME coming down and the high coal costs and all, Q2 would be a difficult quarter,” he said. “The coal costs are starting to ease and coal supplies are increasing. We will start to see an uptick from Q3 and Q4,” Pai said, adding coal supply for the non-power sector has also improved, which will ease the cost pressure going forward.

Hindalco Industries also has no plans to slash its earlier announced capex of Rs 3,000 crore for the current financial year.
“I think our ability to spend now after three months is going to be between Rs 2,500 crore and Rs 3,000 crore. It depends on our execution speed a little bit, but we are not pulled back or cancelled any projects. Most of the company’s new capex, over the past couple of years, was for its downstream business,” he added.

Hindalco’s consolidated net profit for the June quarter rose 48% to ₹4,119 crore, buoyant by strong operational efficiencies. This is an all-time high posted by the company. In comparison, the firm had posted a net profit of ₹2,787 crore for the same period a year ago.

During the quarter under review, the firm’s total revenue from operations rose 40% to ₹58,018 crore from ₹41,358 crore posted in the same quarter of the previous financial year. During the reporting quarter, Hindalco’s Ebitda was up 27% at ₹8,640 crore, compared with ₹6,790 crore recorded in the year-ago quarter.

“The outperformers were Novelis and copper business, while the aluminium upstream was also extremely strong,” Pai said.
Novelis reported a quarterly adjusted Ebitda of $561 million (vs $555 million), up 1% year-on-year, primarily due to higher product pricing, favourable product mix and higher recycling benefits. Aluminium upstream Ebitda rose 41% to ₹3,272 crore, while that of downstream rose 305% to ₹158 crore.

On Wednesday, Hindalco’s share prices closed up 4.41% at `440.05 on the BSE.

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