Hindalco Industries Ltd. share price target

Hindalco Industries Ltd.'s quarterly profit fell in-line with market' expectations from a decline in spot metal prices and lower sales volume due to prolonged rains. Hindalco consolidated net sales fell 9% to Rs 29657 crore in Q2FY'20 compared to corresponding previous year period. Operating margins of the company fell 30 bps to 12.2% leading to 10% decrease in operating profits to Rs 3631 crore. Other income rose 31% to Rs 287 crore. PBDIT decreased 8% to Rs 3918 crore. Interest cost fell 4% to Rs 922 crore in current quarters compared to Rs 962 core in the corresponding...

Novelis reports healthy operational performance for Q2FY20 Novelis, a wholly-owned subsidiary of Hindalco, reported a healthy set of operational numbers for Q2FY20. Net sales revenue was at US$2.9 billion while adjusted EBITDA came in at US$374 million, up 5% YoY. For Q2FY20, reported net income is attributable to its common shareholder was at US$123 million, up 6% YoY. Excluding tax-affected special items, such as US$32 million for restructuring actions in the current period, the company reported net income of $160 million, up 31% YoY. Over the last few quarters,...

Novelis delivered strong quarter with record margins (with EBITDA/t at US$448) and healthy volume growth of 3%. However, headwinds on margins are clearly visible due to accentuating competition and contracting scrap spreads. Incrementally, impending acquisition of Aleris would deteriorate earnings and B/S quality due to its cyclical portfolio, peaked-out margins and...

Aluminum VAP sales were up 5% YoY at 78kt, giving it 24% share in Aluminum CoP was lower by USD27/t QoQ led by reduced energy costs. Copper EBITDA declined 3% QoQ (-37% YoY) to INR2.5b due to a 4% QoQ decline in EBITDA/t to USD426 on lower realization (LME down 5% QoQ). Copper EBITDA fell 3% QoQ (-37% YoY) to INR2.5b due to a 4% QoQ decline in EBITDA/t to USD426 on lower realization (LME down 5% QoQ). Domestic demand for aluminum declined 6% YoY in 2QFY20 (to 967kt) and was flat in 1HFY20. Imports (including scrap) also declined 8% YoY in 2QFY20 but their share in domestic consumption has increased by ~100bp to 42% in 1HFY20. With favorable market conditions in the US, Novelis shipped products from other regions (Europe, Asia and South America) to NA as With capacity utilization at >90%, the company seeks to optimize its portfolio.

Company is seeing softness in prices in North American markets due to increasing competition from Non-Chinese players. However, management expects to offset the weakness through internal efficiencies and cost rationalization. Europe witnessed signs of improved demand, especially in beverage cans. Management expects scrap spreads to sustain at current levels in North America due to strong availability. While, spreads in Asia and South America has come off from the levels of 1HFY20. Novelis consistently delivered across the parameters with consistent...

Weak quarter owing to a sharp drop in aluminium prices Q1FY20 revenue declined 5.1% YoY to Rs. 10,055cr on a standalone basis incl. Utkal (down 3.6% YoY to Rs. 29,972cr on consolidated basis). On the group level, revenue from the Aluminium business decreased 3.5% YoY to Rs. 5,472cr, mainly impacted by the sharp reduction in aluminium prices in the global markets. Moreover, revenue from the Copper business was down 8.4% YoY to Rs. 4,593cr owing to subdued industrial activities and lower copper prices worldwide. Revenue contribution from Novelis declined 2.5% YoY to Rs. 19,819cr. On standalone basis, EBITDA decreased...

Hindalco consolidated net sales fell 4% to Rs 29972.13 crore in Q1FY'20 compared to corresponding previous year period. Operating margins of the company fell 190 bps to 11.6% leading to 17% decrease in operating profits to Rs 3470.14 crore. Cost of material consumed as a percentage of net sales (net of stock adjustment) fell 170 bps to 59.1% while employee benefit expenses rose 50 bps to 7.2%. Power and fuel expenses were up 150 bps to 8.1% and other expenses increased 110 bps to 14%. Other income rose 131% to Rs 296.07 crore. PBDIT decreased 13% to Rs 3766.21 crore. Interest cost rose 5% to Rs 956.64 crore in current quarters compared to Rs 912.65 core in the...

Hindalco's Indian operations reported a subdued set of Q1FY20 numbers. Revenue, EBITDA and PAT came in lower than our estimates. Aluminium segment reported sales of 320000 tonnes, up 6.7% YoY, down 1.5% QoQ (broadly in line with our estimate of ~325000 tonne) while copper sales were at 82000 tonnes (lower than our estimate of ~100000 tonne). The topline for Hindalco's standalone operations + Utkal was at | 10055 crore (lower than our estimate of | 10573.1 crore). EBITDA of Hindalco's domestic aluminium operations (including Utkal) was at | 889 crore (down 42% YoY, 16% QoQ),...

1QFY20 (Standalone + Utkal) EBITDA at INR11.4b (v/s est. of INR10.9b) was down 16% QoQ on lower LME prices and plant shutdown in the copper business. Finance cost rose 8% QoQ (6% YoY) to INR4.9b. Other income decreased 65% QoQ (+43% YoY) on a high base (which includes MTM gains). Adj. PAT was down 63% QoQ (74% YoY) to INR1.9b (v/s est. INR1.8b). Aluminum EBITDA/t decreased 12% QoQ to USD400 (est. USD365) on lower realization (LME was lower ~USD70), partly offset by lower costs. Aluminum production and sales remained largely stable QoQ at 326kt (+2%) and 320kt (2%), respectively. Aluminum EBITDA was down 15% QoQ to INR8.9b. Aluminum CoP was lower USD49 QoQ on the back of lower coal and carbon...

In terms of key geographies, the North America market reported a healthy performance for Q1FY20 wherein its EBITDA increased 43% YoY, to US$170 million. EBITDA per tonne of the North America market was at US$588/tonne in Q1FY20 vs. US$434/tonne in Q1FY19. During the quarter, European capacity was used for transfers to the US, which also further aided US performance Organic expansions are progressing as per schedule. Construction is well under way with all three projects a) 200 KT greenfield automotive...