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  1. Hindalco Q1 standalone net doubles y-o-y on operational efficiencies, lower finance cost

Hindalco Q1 standalone net doubles y-o-y on operational efficiencies, lower finance cost

Higher operational efficiencies and lower finance cost boosted Hindalco Industries’ standalone net profit, which doubled on a year-on-year basis to Rs 734 crore for the three months of April-June 2018.

By: | Mumbai | Updated: August 11, 2018 4:26 AM
Hindalco, Hindalco quarter 1, Hindalco Q1, Hindalco Industries, Utkal Alumina International, quarterly Ebitda, corporate The numbers include Utkal Alumina International’s financials as well. The revenue from operations were up 2.5% y-o-y to Rs 10,670 crore during the quarter. (Reuters)

Higher operational efficiencies and lower finance cost boosted Hindalco Industries’ standalone net profit, which doubled on a year-on-year basis to Rs 734 crore for the three months of April-June 2018. The numbers include Utkal Alumina International’s financials as well. The revenue from operations were up 2.5% y-o-y to Rs 10,670 crore during the quarter. The company achieved its highest ever quarterly Ebitda (earnings before interest, tax, depreciation and amortisation) of Rs 1,951 crore, up 17.5% versus Q1FY18 on the back of supporting macros, operating excellence and higher by-products realisation in the copper business, the company said in a statement. This was particularly encouraging as the performance was achieved despite the increase in input costs, primarily coal and furnace oil.

The interest expense was lower by 23% y-o-y at Rs 464 crore, mainly on account of re-pricing of long term project loans and loan re-payments made during last year. The non-ferrous segment is estimated to clock relatively moderate Ebitda growth due to higher costs in the three months of April-June 2018, analysts at Edelweiss Securities said in a recent report. Non-ferrous companies faced headwinds on the cost front, particularly coal, crude derivatives and alumina, whereas price growth in base metals showed signs of flattening out, they noted. Hindalco’s aluminium Ebitda during the quarter came in at Rs 1,531 crore, up 35% y-o-y, which is much ahead of analyst expectations, on the back of strong aluminium prices and stable operations. Ebitda margin at 27% was the highest in the last 28 quarters.

Kotak Institutional Equities had estimated aluminium Ebitda of Rs 1,230 crore. The company’s production of aluminium was consistent at 323,000 tonne in Q1FY19 versus 321,000 tonne in the corresponding quarter last year. In the non-ferrous space, the all-in aluminum prices increased by 4% sequentially during April-June; strong aluminum premia also aided pricing, according to analysts at KIE. Also, the copper Ebitda increased by 4% to Rs 335 crore on a y-o-y basis for Hindalco on the back of higher by-product realisations, and beat analysts’ expectations of Rs 320 crore.

Revenues were lower due to lower volumes on account of planned maintenance shutdown in Q1FY19 in one of the smelters of the company. Net debt to Ebitda at the end of June 2018 improved for the company to 2.57x from 2.67x at end March 2018. Hindalco in a statement said that the new copper continuous cast rod plant (CCR-3) ramp-up and Utkal Alumina’s brownfield capacity expansion of 500,000 tonne is on schedule and is expected to be complete by FY21.

Novelis announced plans of a 200,000-tonne expansion of the automotive finishing facility in Guthrie, Kentucky, in the US, and 100,000 tonne in Changzhou, China, which are on schedule and are expected to be commissioned in FY21. The company has also signed a definitive agreement to acquire Aleris Corp of the US for an enterprise value of $2.58 billion. This will further strengthen Novelis’ position in the automotive segment and will mark its entry into the high-end aerospace segment.

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