Hindalco Industries Q3 PAT up 7.25% at Rs 359 cr y-o-y

Sales up on rise in volumes, better realisations in aluminium, copper biz

Hindalco Industries on Thursday reported a lower-than-expected stand-alone net profit of Rs 359 crore in the December quarter, up 7.25 per cent from last year as sales grew faster. The subdued growth in profit was due to increased finance costs, which more than doubled year-on-year, as well as a sharp rise in employee, power and fuel and other expenditure.

Stand-alone net sales rose 18.3 per cent on a year-on-year basis to Rs 8,603 crore in the period under review.

“Higher sales reflect increased volume and better realisation in both aluminium and copper businesses,” said the company.

The larger boost, however, came from the aluminium business. Of the total revenue, aluminium made up Rs 3,636 crore, up 32 per cent from last year, aided by surging premiums across world markets.

Aluminium premiums were at $420 per tonne in the period under review, up from $225 per tonne in the same period last year, the company said. This boosted the realisation for the company. Thus, earnings before interest and tax (EBIT) were up 127 per cent year-on-year to Rs 385 crore.

In copper, revenues stood at Rs 4,976 crore in the December quarter, up marginally from the same period last year. “Due to an unplanned shutdown at the copper unit, net sales of the metal were up only three per cent year-on-year,” Managing Director Debnarayan Bhattacharya said at the earnings conference.

“The performance of the copper business reflected enhanced volumes, better treatment-charges/refining-charges (TcRc) and improved by-product credit”, said the company.

Sulphuric acid and di-ammonium phosphate are the two by-products generated during copper smelting.

Though the company's performance was up on year-on-year basis, compared to estimates it was a disappointment, both at the topline as well as the bottomline.

As per Bloomberg estimates, Hindalco's net profit was seen at Rs 467 crore in the quarter gone by, while the topline was expected to touch Rs 9,004 crore.

While the finance cost more than doubled to Rs 447 crore on a year-on-year, operationally too employee (up 27 per cent), power & fuel (up 42 per cent) and other expenditure (up 78 per cent) were up sharply and impacted profit growth—together these were up 49 per cent at Rs 2,677 crore.

As on December 31, Hindalco's net debt stood at Rs 15,000 crore.

In the period under review, while coal prices remained at elevated levels, timely availability of the fuel also posed a significant challenge for on-going pot ramp-up at the upcoming Mahan and Aditya smelters, said the company.

With the coal auction planned shortly, the company is looking forward to a faster resolution to the coal availability issue. Hindalco has an annual coal requirement of 15-16 million tonnes.

Regarding fund arrangement for participation in coal auctioning, chief financial officer Praveen Maheshwari said, “We will not have any separate funding planned towards coal auctioning. The requirement is not going to be much, just 10 per cent of NPV (net present value) which we will fund via internal accruals.”

As on Dec 31, Hindalco Industries has cash worth Rs 6,000 crore.