Hindalco drops 3% on Novelis results

Aditya Birla Group metal flagship Hindalco Industries' shares dropped over four per cent to an intra-day low of Rs 132 on Wednesday after its Canadian subsidiary, Novelis, which contributes around 50 per cent to Hindalco's gross profit, reported disappointing earnings for the March quarter.

Novelis, which is a global leader in aluminium rolled products and the world's largest re-cycler of aluminium, reported nearly 50 per cent drop in its net profit at $29 million compared to $54 million in the corresponding quarter of previous financial year.

Its earnings before interest, taxes, depreciation, and amortisation (Ebitda) or gross profit was $222 million compared to $250 million in the previous financial year.

Analysts say lower volumes led to lower operating profit for the company. Europe accounted for 75 per cent of the decline in its operating profit, analysts say.

Net sales of the company came in at $2789 million against $2549 million year-on-year. Poor performance of its subsidiary is likely to have weighed on the Q4 earnings of Hindalco which is yet to be announced, believe analysts. Shares in Hindalco Industries closed 2.98 per cent lower at Rs 133.50 apiece, under performing the broader Nifty, which ended 1.36 per cent higher.