Hindalco Industries shares fall 7% as Novelis reports 18% decline in Q2 net profit

Hindalco Industries shares cracked more than 7 % to an intra-day low of Rs 657.25 after the company’s US-based subsidiary reported  18% year-on-year decline in Q2 net profit. Novelis reported a net income of $128 million for the quarter ending September of the current financial year.

Novelis had to pay $61 million in charges due to production interruptions at its Sierre plant, higher restructuring and impairment expenses, and decreased operational performance.

The US-based company posted a net income of $157 million in the same quarter a year ago. Hindalco is yet to report its quarterly earnings for the second quarter of the current fiscal year.

Hindalco Industries’ performance in Q1

Hindalco Industries posted a consolidated net profit of Rs 3,074 crore in Q1 FY25, a 25% jump on year, compared to Rs 2,454 crore in the same quarter a year ago. The revenue from operations stood at Rs 57,013 crore for the quarter ending June 30, 2024, up 7.6% on year against Rs 52,991 crore in Q1 FY25.

JM Financial on Hindalco Industries

The company to revisit ‘Near Term’ EBITDA/t guidance due to tightening scrap spreads in light of Chinese import policy. Hindalco’s Bay Minette project could deliver $1000/t EBITDA per ton based on pricing agreements and cost efficiencies. Its Bay Minette project is on track at an unchanged cost of $4.1 billion and a commissioning timeline of H2CY26. 

“Hindalco, given 70%+ steady/strong EBITDA being non-LME linked, remains our preferred play in the metal space. We await Hindalco’s consolidated numbers to be published shortly,” said JM Financial Services in a research report. The brokerage retained the “Buy” rating on the stock with a changed target price of Rs 760. Earlier, the target price was Rs 730. 

Hindalco Industries Vs Nifty 50

Shares of Hindalco have fallen 3.9% in the last five trading sessions. The stock has declined 11% in the last one month. However, the stock has risen 5.3% in the past six months. From year to date, the scrip has delivered a return of 7% and 35% in the last one year. 

To compare, the benchmark index, Nifty 50, has risen 0.6% in the last five trading sessions. However, the benchmark index has fallen 2.3% in the past one month. However, the index has delivered a return of 8.6% in the past six months. It has risen by 11.4% from year to date and 25% in past one year.