Hindalco Q1 consolidated PAT at Rs 2,787 cr vs loss of Rs 709 cr a year ago

The Aditya Birla Group firm's topline stood at Rs 41,358 crore, up 63% from same period last year with Novelis contributing strongly at Rs 28,428 cr

Hindalco Industries reported a consolidated net profit of Rs 2,787 crore in June quarter as against a loss of Rs 709 crore in the corresponding period last year on the back of increased revenue and a low base due to Covid-19 first wave hit last year.

The Aditya Birla Group company’s topline in the period under review stood at Rs 41,358 crore, up 63 per cent from same period last year with Novelis contributing strongly at Rs 28,428 crore.

As per Bloomberg estimates, the company’s net sales was seen at Rs 41,433 crore in the quarter gone by, while the bottomline was expected to be at Rs 2,360 crore.

“This quarter we delivered record-breaking financial results despite the impact of the Covid second wave. Our robust financial performance, accelerated pace of deleveraging and the increasing strength of our balance sheet has been recognised by the market and is reflected in credit rating upgrades for both Novelis and Hindalco," Satish Pai, managing director at Hindalco Industries Ltd was quoted as saying.

“The improvement is visible across all our business segments where we are seeing strong demand, plants running at capacity, and better margins. We have started FY22 at a strong pace and we are confident that our resilience against market swings will support us in continuing to deliver our best," he added.

The company reported an all-time high consolidated earnings before interest, taxes, depreciation and ammortisation (EBITDA) at Rs 6,790 crore, up 188 per cent year-on-year and 16 per cent sequentially. Novelis quarterly adjusted EBITDA was also at all-time high at $555 million, up 119 per cent year-on-year and 10 per cent quarter-on-quarter. Also Novelis EBITDA/tonne was at all-time high at $570.

The company also reported an all-time high quarterly India business EBITDA at Rs 2,513 crore, up 121 per cent year-on-year and 32 per cent increase sequentially.

“Novelis EBITDA/tonne will remain above $500 and we do see this level sustainable through FY22 as sectors they are in such as can and auto and markets that they are in which is Canada, US and Europe are doing quite well,” Pai told Business Standard today.

The company also saw its consolidated net debt/EBITDA improve further to 2.36x as of June 30, 2021 vs the peak of 3.83x as of June 30, 2020.

“Our target for net debt/ EBITDA is a range which is between 2-2.5 and we are already at 2.36 and it is at this stage because of higher EBITDA. Novelis will pay down another $600 million which is term loan we have,” said Pai.

Alongside, S&P Global Ratings raised its issuer credit rating on Novelis to 'BB’ from 'BB-, while Credit Rating upgraded by Crisil from ‘AA’ to ‘AA+’ with ‘Stable’ outlook for Hindalco bonds.

“Upgraded ratings apart from giving the company a better cost of funding, it also gives investors comfort level on quality of balance sheet and debt levels as higher ratings indicate better stability for the company,” said Pai.

The company's aluminium (India) EBITDA was also at an all-time high of Rs 2,352 crore in Q1 FY22, compared with Rs 973 crore for Q1 FY21, an increase of 142 per cent on year, mainly due to favourable macros, improved product mix and better operational efficiencies.

“In Q1 we were impacted by second wave of COVID-19 in India and April and May was weak. We are now getting out of it so Q2 (Jul-Sep) will be better than Q1. Also the pace of vaccination has picked up so we see EBITDA sustainable through FY22 for India market as well,” Pai said.

Going ahead, the company said it is in a better position to tackle the ongoing pandemic.

"Hindalco has prepared to tackle the third wave of Covid by fortifying its efforts to protect employees and the community. Over 51,000 employees have been vaccinated with at least one dose," said the company release.

The company has boosted medical infrastructure and equipped its own hospitals and health centres with critical care equipment such as CT scan machines, set up oxygen lines in remote locations to serve patients needing ICU care, and enhanced its lab testing facilities. The company has also strengthened its medical teams, including adding pediatricians, and up skilling its paramedics.

In terms of business to Hindalco Industries remains bullish on demand front for both overseas as well as domestic market.

“In the US there are one lakh cases per day but the stimulus package, markets are keeping the economy strong. In China (with respect to Wuhan), the Chinese are very swift at taking action. So they will immediately lockdown and act immediately. Am not concerned over the rising cases in Wuhan,” said Pai.