Shares of Hindalco Industries Limited, a subsidiary of Aditya Birla Group, surged as much as 6.12% on Monday after the company reported an 18% year-on-year jump in revenue from operations at ₹56,176 crore in the July-September quarter, as against ₹47,665 crore in the same period last year. Revenue growth of the company was aided by lower aluminium prices on the London Metal Exchange.
On Monday, Hindalco's stock opened a tad higher at ₹432, as against the previous closing price of ₹429. The stock of Hindalco hit an intra-day high of ₹458, taking its market capitalisation to ₹1.02 lakh crore, with as many as 5.72 lakh shares changing hands on the BSE as against the two-week volume of 3.91 lakh. The company hit a 52-week high of ₹636 on March 29 this year, whereas it hit a 52-week low of ₹309 on June 20 this year.
Meanwhile, the BSE Sensex was down 135 points or 0.22% at 61,659, whereas the Nifty 50 index declined 11.75 points or 0.06% at 18,337.
According to the company’s stock exchange filing, the company’s aluminium upstream revenue witnessed a growth of 11% YoY at ₹8,215 crore in the September quarter as against ₹7,421 crore in the same period last year. The company’s aluminium downstream revenue witnessed a growth of 13.1% at ₹2,884 crore in the September quarter as against ₹2,549 crore in the same period last year. As per the data available on the London Metal Exchange, aluminium prices witnessed a decline of 45% in October 2022, as compared to March 2022.
However, the company’s earnings before interest, taxes, depreciation and amortization (EBITDA) for aluminium upstream witnessed a decline of 57% YoY at ₹1,347 crore in the September quarter as against ₹3,128 crore in the same period last year owing to higher input costs and unfavourable macro-economic conditions. The EBITDA margin for aluminium upstream stood at 16.4%.
Moreover, the company’s EBITDA for aluminium downstream witnessed a surge of 163% YoY at a record ₹200 crore in the September quarter this year, as against ₹76 crore in the same period last year.
Satish Pai, managing director of Hindalco Industries, said, “Over the years, Hindalco has transitioned to a resilient and integrated business model which supports our performance and profitability even when times are challenging. Despite a surge in input costs, the company produced the highest-ever aluminium metal volumes. While the Upstream Aluminium Business EBITDA was impacted due to elevated raw material and energy costs, our aluminium Downstream Business performed well with EBITDA more than doubling YoY due to better pricing and market demand.”
Apart from the aluminium business, the company’s Novelis business, which is into manufacturing of beverage cans, automotive parts and aerospace parts, witnessed a growth in revenue from operations by 17% YoY, whereas the company’s revenue for copper business was up 1% YoY. While the EBITDA for Novelis business witnessed a decline of 8% YoY, the EBITDA for its copper business witnessed a growth of 55% YoY with the highest-ever metal and copper rod sales.
The company witnessed a decline in its consolidated profit by 35.5% at ₹2,205 crore during the quarter under review as against ₹3,427 crore in the same period last year owing to a drop in the aluminium prices in the international market as well as higher input costs.
Following the quarterly results, domestic brokerage ICICI Securities has given a ‘Buy’ call for Hindalco, while raising the company’s target price to ₹515. Citing an increase in Novelis' EBITDA in the coming quarters, brokerage firm Motilal Oswal has revised the target price for Hindalco to ₹520 from its earlier price of ₹480. JP Morgan has kept an ‘overweight’ rating for the Hindalco stock while slashing the target price from ₹560 to ₹520 amidst fluctuation in the LME aluminium prices.
