Hindalco’s net jumps three-fold to Rs 1,928 crore boosted by Novelis business

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May 22, 2021 3:15 AM

Hindalco’s gross debt declined by Rs 18,187 crore and net debt fell by Rs 14,883 crore as of March 31, 2021, from its peak on June 30, 2020.

Consolidated net debt-to-EBITDA ratio improved significantly to 2.59 times as on March 31 from a peak of 3.83 times on June 30, 2020.

Hindalco Industries beat analyst estimates on all fronts as it reported a near three-fold year-on-year increase in its consolidated net profit of Rs 1,928 crore for the quarter ended March 31, 2021. The earnings were driven by strong performance at its US-arm Novelis and India aluminium business amidst the sharp surge in aluminium prices globally.

The company’s consolidated revenue from operations rose 38% y-o-y to Rs 40,507 crore during the quarter. There was a sharp rise in consolidated EBITDA (earnings before interest, tax, depreciation and amortisation), which soared 40% y-o-y to Rs 5,845 crore aided by a record performance by the India aluminium business and Novelis.

“The results were driven by a strong performance by Novelis and India aluminium business, supported by higher volumes and better product mix, lower input costs, stability in operations and cost saving actions,” a company statement said.

Novelis reported its best-ever quarterly adjusted operating income of $505 million, up 32% y-o-y on the back of higher organic volume, favourable metal benefits, and a $60 million EBITDA contribution from the acquired Aleris business. The adjusted EBITDA per tonne increased 9% y-o-y to $514.

The India business reported a record quarter of earnings as well. The Indian aluminium business’ EBITDA hit an all-time high of Rs 1,610 crore during the quarter, up 54% y-o-y. EBITDA margin of 27% was the highest in the last 12 quarters. Though aluminium metal production at 316 KT was lower by 3% y-o-y, aluminium metal sales were higher by 5% at 329 KT during the quarter.

The revenues in the copper business were impacted favourably by the higher global prices of copper, which was up 80% y-o-y to Rs 8,508 crore. However, EBITDA for the business declined a sharp 33% to Rs 269 crore.

Commenting on the performance, Satish Pai, managing director, Hindalco, said, “Our record Q4 results have strengthened our balance sheet even further, absorbing the Aleris acquisition and restoring consolidated net debt to EBITDA ratio to pre-acquisition levels. Through Q4, our India business continued to rise with demand higher than pre-Covid levels”.

Hindalco’s gross debt declined by Rs 18,187 crore and net debt fell by Rs 14,883 crore as of March 31, 2021, from its peak on June 30, 2020. Consolidated net debt-to-EBITDA ratio improved significantly to 2.59 times as on March 31 from a peak of 3.83 times on June 30, 2020.

The company said Aleris integration work continues with $79 million run-rate combination cost synergies achieved through the end of Q4FY21. The ground-breaking for Novelis’ new $325-375 million Cold Mill project in Zhenjiang, China, is expected in mid-FY22. Also, Novelis’ expansion of recycling, casting, and rolling facilities in Pinda, Brazil, is on track, with commissioning expected by end of FY22.

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