Hindalco's Novelis Q2 Results Review - Inline, Guidance Lowered For A Quarter: Motilal Oswal

Motilal Oswal Report

Hindalco Industries Ltd.'s subsidary Novelis reported a strong beat on topline in Q2 FY23 but Ebitda was in line with our estimate. Strong performance by Asia division strengthened margin.

Revenue/Ebitda/adjusted profit after tax came in at $4,799 million/$502 million/ $238 million, down 5.7%/10.5%/14.7% QoQ, respectively.

Topline was a sharp 18% above our estimate while Ebitda and adjusted profit after tax were in line with our estimates in Q2 FY23.

Shipments during the quarter stood at 984 thousand tonne (up 1.7% YoY/2.3% QoQ) and were in line with our estimate of 1,000 thousand tonne.

Management highlighted that higher energy and logistics costs are likely to impact the second half adversely, especially Q3 FY23 to the tune of $75- 125/tonne.

Contracts will get reset from January 01, 2023 when Novelis will try and cover most of the increased costs and push for higher Ebitda of $525/tonne on a normalised basis.

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