Q1FY23 Preview: Hindalco Industries: Revenue seen at Rs502 billion, PAT at Rs28 billion

9 Aug 2022 , 08:27 AM

Result date: 10^th August, 2022
Recommendation: Buy
Target price: Rs489
Source: IIFL Research

Hindalco Industries (Hindalco) is likely to post 21.5% growth in consolidated revenues over the year-ago quarter. Sequentially, though the performance is likely to be weak. In other words, the company’s performance will be in sync with movement in LME Aluminium prices (up 21% over the year-ago quarter, down 11% sequentially). In India business, Hindalco’s aluminium volumes could post mid-single digit growth on a year-on-year basis. Copper volumes could increase by 24-25% over the year-ago quarter. Novelis could post flattish volumes sequentially as well as over the year-ago quarter.

In the India business, higher aluminium prices could partially compensate for increasing input costs (particularly coal). EBITDA margins of Novelis could be aided by strong show of cans segment, but could be negated by pressure from higher power and fuel costs. Higher Tc/Rc margins could drive EBITDA of the copper business. Consolidated EBITDA could grow 3.8% over the year-ago quarter.

Profit After Tax (PAT) could grow 4.2% over the year-ago quarter.

Important management insights to watch out for:

• Guidance on Indian upstream capex timelines
• Update on capex for Novelis
• Novelis’ guidance on shipments and EBITDA

Rs. Billion	June 2022 estimates	YoY change	QoQ change
Revenue	502	21.5%	(9.9)%
EBITDA	62	3.8%	(11.4)%
Profit After Tax	28	4.2%	(29.7)%

Source: Brokerage reports