Hindalco Industries Q3 Results Review - Indian Operations Improve QoQ; Novelis Remains A Drag: Axis Securities

Axis Securities Report

With Novelis numbers already reported, Hindalco Industries Ltd.'s segmental Ebitda (down 32%/16% YoY/QoQ) beat of 5% versus our estimate was driven by better than expected Ebitda at Indian aluminium and copper operations.

Aluminium Ebitda grew by 13% QoQ on lower coal costs. Copper Ebitda was flat QoQ, 2% beat on better treatment/refining charges and cold coil rod volumes. Novelis (down 25%/30% YoY/QoQ reported earlier) dragged the consolidated Ebitda down. Consolidated revenue grew 6% YoY, (down 5% QoQ) due to better realisations and volumes at Indian operations. Profit after tax declined 63%/38% YoY/QoQ led by a drop in Ebitda.

We factored in lower Ebitda/tonne guidance for Novelis earlier. We now factor in some coal cost deflation in our upstream aluminium business and as a result, we slightly increase our Ebitda estimates for FY23/24E up, by 3%/5% YoY respectively against our Feb 08 note (FY25 estimates largely unchanged).

We maintain our cautious view on the stock in light of Novelis headwinds and possibility of supply concerns of coal ahead of the summer season.

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