Indian Share Market Tips- Hindalco standalone net soars 54% to rs 725 crore, cautious on rising imports
Higher operational efficiencies and lower finance cost boosted Hindalco Industries' standalone net profit, which jumped over 54% on a year-on-year basis to `725 crores for the three months of July-September 2018. The numbers include Utkal Alumina International’s financials as well.
Higher operational efficiencies and lower finance cost boosted Hindalco Industries’ standalone net profit, which jumped over 54% on a year-on-year basis to `725 crores for the three months of July-September 2018. The numbers include Utkal Alumina International’s financials as well.
However, the management sounded out words of caution on rising imports amidst rising trade wars globally. Managing director Satish Pai said though India’s demand for aluminum is growing at a rapid rate of 13% y-o-y, domestic producers’ sales have grown at a mere 2%.
“The market growth was completely swept off by imports which grew at 22% y-o-y, taking their market share up from 55% to 60%. This is significant considering it was 40% a few years back. At this rate, India is staring at an inflated import bill of over $5 billion in FY19 which is going to further hit our ailing trade deficit,” Pai said.
He said the main demand is to raise the duty as well as put quantitative restrictions. As for scrap, which is getting dumped into India from the US after China recently imposed 25% import duty on the product from the US, he said the demand is to equalize the duty between scrap and metal, which is at 7.5% currently for the latter.
Revenues from operations were up 5% y-o-y to Rs 10,833 crore during the quarter. The quarterly EBITDA (earnings before interest, tax, depreciation, and amortization) of `1,922 crore was up over 5% over Q2FY19 because of supporting macros, operating excellence and better realizations, the company said in a statement. This was despite the increase in input costs, primarily coal and furnace oil.
The interest expense was lower by 16% y-o-y at `479 crores, mainly on account of re-pricing of long-term project loans and loan repayments made during last year.
LME aluminum (Al) was the best performer among base metals with an increase of 2% y-o-y, Edelweiss Securities noted in a recent report. However, on the cost front, there was no respite as coal prices continued to remain firm with e-auction premium at about 75-80% on an average and high imported coal price (north of $100/tonne), high alumina prices (up 65% y-o-y and 5% q-o-q), and crude derivatives’ prices remained on a firm footing as well, Edelweiss said.
Hindalco’s aluminum EBITDA during the quarter came in at `1,364 crores, up over 13% y-o-y on the back of strong supporting macros, partially offset by an increase in input prices.
Copper segment EBITDA, however, declined 17% y-o-y to Rs 388 crore, mainly on account of lower volumes due to a planned maintenance shutdown at one of the smelters in July and also because of lower copper realizations. This was partially offset by higher by-product realizations.
Net debt to EBITDA improved to 2.47x from 2.67x at the end of March 2018. The company prepaid another Rs 1,575 crore in October, the statement said.
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