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Hindalco Industries Ltd, the metal flagship of the Aditya Birla Group, has announced a remarkable 123.3% year-on-year (YoY) surge in its net profit for the second quarter ending September 30, 2024. This robust performance, reaching ₹1,891 crore, is attributed to a combination of factors including a strong operational performance by its Indian business, favorable macroeconomic conditions, and strategic cost management initiatives. The company's previous fiscal's corresponding quarter saw a net profit of ₹847 crore, making this growth even more significant. These figures exceeded market expectations, as the CNBC-TV18 poll had predicted a profit of ₹1,250 crore for the quarter.
The company's revenue from operations also demonstrated healthy growth, climbing 7.7% to ₹22,262 crore compared to ₹20,676 crore in the same period last year. This outperformed the CNBC-TV18 poll's estimate of ₹21,350 crore. This upward trajectory in revenue signifies the company's strong market position and its ability to capitalize on opportunities in the metal sector.
Operating performance also mirrored this positive trend. EBITDA (Earnings Before Interest, Tax, Depreciation, and Amortization) surged by 56.5% to ₹2,749 crore in the second quarter of the current fiscal, surpassing the ₹1,756 crore achieved in the same period last fiscal. Again, this exceeded the CNBC-TV18 poll's prediction of ₹2,495 crore. The EBITDA margin for the quarter stood at 12.4%, significantly higher than the 8.5% recorded in Q2 of FY24 and outperforming the poll's projected 11.7%. This highlights the company's improved efficiency and profitability.
Hindalco's various business segments contributed to this strong performance. The aluminium upstream segment recorded an impressive EBITDA per tonne of $1,349, marking an 80% increase and demonstrating industry-leading margins of 41%. The copper business achieved a record EBITDA of ₹829 crore, a 27% YoY increase. However, Novelis, the company's aluminum rolling and recycling business, faced challenges due to the Sierre flood and tighter scrap spreads. Excluding the impact of the flood, shipments increased by 4%, and EBITDA per tonne reached $502.
Looking at specific geographic performances, Hindalco's aluminium (India) upstream revenue witnessed a 16% rise to ₹9,125 crore, with EBITDA growing 79% to ₹3,709 crore. This strong performance was driven by reduced input costs and maintained a 41% margin. The downstream revenue reached ₹3,161 crore, an increase of 20%, driven by downstream sales of 103 KT, up 10%. However, downstream EBITDA per tonne experienced a 11% decline to $179. In the copper (India) segment, revenue grew 5% to ₹13,114 crore, and EBITDA reached an all-time high of ₹829 crore, reflecting a 27% increase. Copper metal sales dipped by 13% to 117 KT, and continuous cast rod sales fell by 10% to 90 KT.
Novelis, the company's global aluminum rolling and recycling business, saw shipments rise by 1% to 945 KT, fueled by record beverage packaging shipments. Revenue climbed 5% to $4.3 billion, driven by higher aluminum prices. However, adjusted EBITDA decreased by 5% to $462 million due to unfavorable metal benefits, product-mix challenges, and the $25 million impact of the Sierre flood, contributing to an 18% decline in net income to $128 million. The Sierre flood had a total net cash impact of $80 million after insurance, affecting adjusted EBITDA by $30 million, with $25 million recorded in this quarter.
Hindalco maintained robust cash flow, keeping its net debt to EBITDA ratio below 1.2x, indicating a healthy financial position. These strong results follow the company's impressive first quarter performance, where net profit soared by 138% to ₹1,314 crore.
Overall, Hindalco's Q2 FY25 performance reflects strong operational efficiency and a favorable market environment. The company's ability to manage costs effectively and capitalize on growth opportunities in both its domestic and global operations has resulted in record-breaking financial results. With a robust financial position and a clear focus on growth, Hindalco is well-positioned to navigate the evolving metal industry landscape.
Source: All parameters beat estimates, net profit zooms 123% - CNBC TV18