Hindalco EBITDA seen strong despite subdued volumes
This story was originally published at 11:09 IST on 22 July 2024
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By Rajesh Gajra
MUMBAI – Higher domestic aluminium prices in the June quarter compared with the previous quarter will likely drive Hindalco Industries Ltd's topline and operating profit upwards sequentially despite volumes being subdued. The bottomline will track the growth in operating profit, or earnings before interest, tax, depreciation, and amortisation.
The company is expected to report a consolidated net profit of 36.84 bln rupees and revenue of 583.79 bln rupees, according to an average of estimates by eight brokerages. The estimated net profit is likely to be up 16% on quarter and 50% on year, while the revenue is seen higher 4.3% on quarter and 10.2% on year. The net profit estimates range from 32.76 bln rupees to 42.8 bln rupees, while the revenue estimates range from 544.22 bln rupees to 611.86 bln rupees. The EBITDA, as per seven brokerages' estimates, is seen between 70 bln rupees and 81.2 bln rupees.
Brokerage Nuvama Wealth Management estimates Hindalco's India aluminium sales volume to decline 6.5% sequentially and 1.8% on year to 330,000 tn in Apr-Jun. It expects the company's US subsidiary Novelis' aluminium volumes to marginally decline 0.1% on quarter but increase 8.1% on year. Nuvama Wealth sees Hindalco's copper sales volume falling sequentially by 12.5%.
Lower sequential volume notwithstanding, Hindalco is seen benefitting from higher sales realisation on the back of higher domestic prices. Improved average selling price will drive strong earnings for Hindalco in the June quarter, brokerage Motilal Oswal Financial said in its preview.
Higher aluminium prices are seen aiding the company's EBITDA. According to brokerage Kotak Securities' Institutional Equities Research, Hindalco's India EBITDA is likely to rise 21% over the previous quarter and 70% on year primarily due to aluminium sales. India aluminium EBITDA, including production from the Utkal alumina plant, will likely jump 34% on quarter and 87% over the year-ago quarter "led primarily by higher prices", according to the brokerage.
Novelis' EBITDA would still be affected sequentially due to continued channel destocking, the brokerage said. The US subsidiary will likely report a 2.1% on-quarter decline and 20% on-year growth, it said.
Hindalco's copper EBITDA, according to Kotak Institutional Equities, will likely rise 16% on year but fall 20% on quarter "led by resilient TcRcs (copper concentrate treatment and refining charges) and a high sequential base". Brokerage YES Securities expects Hindalco's EBITDA to go up 0.5% sequentially and 15.9% over the year-ago period "led by better realisations and a stable cost structure."
The company will detail its Apr-Jun earnings on Aug 13, while its US subsidiary Novelis will likely publish its financial results for the June quarter around a week before. Investors, according to Motilal Oswal Financial, will be keenly watching for multiple capex timelines and Novelis' guidance on EBITDA per tn.
At 0958 IST, shares of Hindalco traded 0.5% higher at 666.70 rupees on the National Stock Exchange.
Following are the Apr-Jun consolidated earnings estimates of Hindalco from eight brokerage houses:
| Broker name | Net Sales | Net Profit | EBITDA |
| -------(In mln rupees)------- | |||
| Anand Rathi Share and Stock Brokers Ltd | 6,06,078 | 33,547 | -- |
| Axis Securities Ltd | 6,11,860 | 37,840 | 75,350 |
| Elara Securities (India) Pvt Ltd | 5,44,218 | 41,026 | 80,780 |
| Kotak Institutional Equities | 5,99,015 | 37,147 | 80,222 |
| Motilal Oswal Financial Services Ltd | 5,83,000 | 35,000 | 70,000 |
| Nuvama Wealth Management Ltd | 5,49,600 | 34,600 | 70,200 |
| Prabhudas Lilladher Pvt Ltd | 5,91,400 | 42,800 | 81,200 |
| YES Securities (India) Ltd | 5,85,138 | 32,763 | 70,786 |
| Average | 5,83,789 | 36,840 | 75,505 |
Edited by Namrata Rao
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