Hindalco Ltd missed estimates for Q4FY18, as higher operating costs from the aluminium segment lowered earnings on a standalone basis. Revenue fell by 1.2% yoy to Rs11,611cr (expectation Rs11,286cr). EBITDA stood at Rs1,258cr, down 6.6% yoy against estimates of Rs1,298cr. EBIDTA margin fell by 64bps yoy to 10.8%. Net Profit stood at Rs377cr against an estimate of Rs465cr.
Hindalco’s Aluminum revenue fell by 0.6% yoy, while EBITDA grew by 11.5% yoy. This was due to growth in premium of ~18% yoy for aluminum. Production of Aluminum metal rose by 0.9% yoy (320k tonnes) and value added products fell by 1.6% (123k tonnes).
Hindalco’s Copper revenue and EBITDA fell by 0.5% yoy and 33% yoy respectively. This was due to production issues, which led to significantly lower DAP production.
Novelis reported a strong quarter with revenue and adjusted EBITDA growing by 17% yoy and 9% yoy respectively. This growth was supported by higher auto shipments. EBITDA per tonne for Novelis stood at $396.
Net Debt-to-EBITDA stood at 2.8x at the end of FY18.
Conference Call Highlights
The management informed that the domestic aluminium industry is in talks with the government to come out with import quotas to help protect domestic producers against dumping.
The copper segment is expected to recover from Q2FY19 onwards due to ramp up of CCR-3, after it had been shut in Q4FY18 for maintenance activities.
Regarding hedging policy the management stated that they have hedged 28% of exposure at $2,100 per tonne for rupee LME and an additional 12% at $2,270 for the metal. The management aims to keep hedges at ~30% level going forward.
Domestic capex guidance for FY19 stands at Rs1,600cr. This includes capex for expanding alumina production at Utkal as well as increasing of downstream capacity. Capex for Novelis is expected at $370-380mn
Hindalco Industries Ltd is currently trading at Rs. 240.50, down by 2.6 points or 1.07% from its previous closing of Rs. 243.10 on the BSE.
The scrip opened at Rs. 242.50 and has touched a high and low of Rs. 247.30 and Rs. 237.40 respectively. So far 1,61,91,138 (NSE+BSE) shares were traded on the counter. The stock is currently trading below its 200 DMA.
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