Earnings Outlook
High aluminium prices to lift Hindalco Oct-Dec financials
This story was originally published at 09:39 IST on 30 January 2025
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By Narayana Krishna
HYDERABAD - Continued strong momentum in aluminium and alumina prices is likely to help Hindalco Industries Ltd. report robust growth in its net profit for the December quarter with a double-digit growth in revenues on a year-on-year basis, according to analysts. While the country's largest aluminium manufacturer's volume growth remains stable, higher prices of the metal across markets are likely to spike the key earnings metrics.
The Aditya Birla group entity is expected to report a consolidated net profit of INR 35.3 billion for Oct-Dec, up over 51% on year but down nearly 10% on quarter, according to an average of estimates from eight brokerages. The sequential fall is mainly on account of weak performance by its US-based wholly-owned subsidiary, Novelis.
Analysts' estimates for Hindalco's December quarter net profit have huge variations, with estimates ranging from a low of INR 17.9 billion by Systematix Shares and Stocks India Ltd. to a high of INR 43.9 billion by Nuvama Wealth Management Ltd.
Hindalco's revenue for Oct-Dec is seen at INR 593.6 billion, up 12.4% on year and 2% on quarter, with estimates ranging from a low of INR 566.67 billion by Elara Securities India Pvt. Ltd. to a high of INR 612.9 billion by Kotak Institutional Equities. The company will declare its earnings for the December quarter on Feb. 13.
Hindalco produces both aluminium and copper, with its aluminium facilities located in India and the US, while its overseas operations are managed by Novelis.
According to Axis Securities Ltd., Hindalco's aluminium sales in December quarter are likely to be at 341,000 tonnes, flat on year, but up 2.5% on quarter. Copper volumes are seen at 118,000 tonnes, flat on both year-on-year and sequential basis, the brokerage said. The shipments from its arm, Novelis, are also seen posting flat on-year growth and are likely to fall 3% sequentially, Axis Securities said.
"Despite the expected rise in operating costs and muted performance of its subsidiary, Novelis, Hindalco Industries is expected to benefit from higher aluminium prices," Elara Securities said.
Brokerages including Elara Securities, Kotak Institutional, Axis Securities projected Hindalco's earnings before interest, tax, depreciation and amortisation margins, or EBITDA margins, to see decent expansion on a year-on-year basis in December quarter, while it may fall sequentially.
"EBITDA and margins are expected to improve by 28% YoY and 131 bps (basis points) respectively, led by higher metal prices along with lower power costs in India. On a quarter-on-quarter basis, both EBITDA and margins are likely to decline due to lower EBITDA at Novelis on account of lower scrap spreads and shipments," Axis Securities said.
Hindalco's EBITDA for December quarter is pegged at INR 76.45 billion, as per the average of estimates from eight brokerages. The estimates ranged from INR 63.0 billion to INR 85.3 billion.
Following are the Oct-Dec earnings estimates for Hindalco Industries Ltd. based on reports from eight brokerage firms in the descending order by the estimate of net profit:
|
Brokerage name |
Net Sales |
Net Profit |
EBITDA |
|
-------(In INR million)------- |
|||
|
Nuvama Wealth Management Ltd |
5,71,200.00 |
43,900.00 |
79,400.00 |
|
Axis Securities Ltd |
6,04,690.00 |
41,650.00 |
77,160.00 |
|
Kotak Institutional Equities |
6,12,920.00 |
39,075.00 |
81,017.00 |
|
Motilal Oswal Financial Services Ltd |
5,95,382.00 |
37,665.00 |
76,688.00 |
|
YES Securities (India) Ltd |
5,88,970.00 |
37,641.00 |
72,702.00 |
|
Elara Securities (India) Pvt Ltd |
5,66,672.00 |
36,755.00 |
76,297.00 |
|
Prabhudas Lilladher Pvt Ltd |
5,98,300.00 |
27,900.00 |
63,000.00 |
|
Systematix Shares and Stocks (India) Ltd |
6,10,600.00 |
17,900.00 |
85,300.00 |
|
Average |
5,93,591.75 |
35,310.75 |
76,445.50 |
At 0936 IST, shares of Hindalco Industries were trading at INR 594.85 on the National Stock Exchange, up 1.94% from its previous close. End
US$1 = INR 85.57
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Tanima Banerjee
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