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Aluminium production too was impacted due to some operational issues at both its smelter. EBIT declined 44.2% qoq to 2.7bn
CMP Rs120, Target Rs147, Upside 22.3%
| (Rs mn) | Q1 FY13 | Q4 FY12 | % qoq | Q1 FY12 | % yoy |
| Net sales | 60,279 | 76,471 | (21.2) | 60,309 | (0.0) |
| Material costs | (38,951) | (53,161) | (26.7) | (38,252) | 1.8 |
| Power and fuel costs | (7,573) | (7,440) | 1.8 | (6,353) | 19.2 |
| Personnel costs | (2,902) | (2,678) | 8.4 | (2,501) | 16.0 |
| Other overheads | (6,222) | (4,544) | 36.9 | (4,528) | 37.4 |
| Operating profit | 4,631 | 8,648 | (46.4) | 8,675 | (46.6) |
| OPM (%) | 7.7 | 11.3 | (363) bps | 14.4 | (670) bps |
| Depreciation | (1,705) | (1,658) | 2.8 | (1,754) | (2.8) |
| Interest | (815) | (801) | 1.8 | (667) | 22.1 |
| Other income | 3,014 | 1,605 | 87.8 | 1,779 | 69.4 |
| PBT | 5,126 | 7,794 | (34.2) | 8,033 | (36.2) |
| Tax | (878) | (1,395) | (37.0) | (1,589) | (44.7) |
| Effective tax rate (%) | 17.1 | 17.9 | 19.8 | ||
| Adjusted PAT | 4,248 | 6,400 | (33.6) | 6,445 | (34.1) |
| Adj. PAT margin (%) | 7.0 | 8.4 | (132) bps | 10.7 | (364) bps |
| Reported PAT | 4,248 | 6,400 | (33.6) | 6,445 | (34.1) |
| Ann. EPS (Rs) | 17.7 | 26.7 | (33.6) | 26.9 | (34.1) |
Lower production led to an underperformance in topline
Hindalco in Q1 FY13 registered revenues of Rs60bn, quite lower than our estimate of Rs70bn, on account of lower copper and aluminium production. Copper division revenue was lower by 22.9% qoq to Rs39bn due a 27.4% decline in copper production and lower byproduct revenue. Copper production declined sharply in Q1 FY13 after registering its all time high quarterly production in Q4 FY12 as the company had taken maintenance shutdown. We are surprised by the shutdown as the company had taken its bi-annual shutdown in Q2 FY12. Aluminium division revenue too was lower by 17.5% qoq on account of lower aluminium production and lower product premiums. Aluminium metal production decreased by 8.3% qoq to 132,000 tons from 144,000 tons in Q4 FY12. The decline in aluminium production was due to operational issues in both the smelters. Alumina production during the quarter too was lower by 2.9% qoq to 335,000 tons.
| (tons) | Q1 FY13 | Q4 FY12 | % qoq | Q1 FY12 | % yoy |
| Aluminium | 335,000 | 345,000 | (2.9) | 347,071 | (3.5) |
| Alumina | 132,000 | 144,000 | (8.3) | 123,325 | 7.0 |
| Rolled Products | 25,247 | 25,247 | 0.0 | 24,158 | 4.5 |
| Extrusion | 57,827 | 55,689 | 3.8 | 54,042 | 7.0 |
| Copper Cathodes | 8,886 | 8,744 | 1.6 | 9,637 | (7.8) |
| CC Rods | 69,000 | 95,000 | (27.4) | 50,830 | 35.7 |
