Next Few Quarters Will Be Difficult To Navigate, Says Hindalco

The next couple of quarters are going to be extremely difficult to navigate, especially for companies involved in the commodity side of business, according to Satish Pai of Hindalco Industries Ltd.

The business environment is "very uncertain", Pai, managing director at India's largest aluminium producer, told BQ Prime's Niraj Shah. "For our Indian business, the availability and pricing of coal has been the single biggest thing that has caused a big drop in the upstream profits."

According to him, the upstream aluminium business had a negative impact on its Q2 earnings.

Hindalco (Consolidated, YoY)

• Revenue up 17.8% at Rs 56,176 crore. Bloomberg estimate: Rs 43,576 crore.

• Ebitda down 29% at Rs 5,362 crore against the estimated Rs 5,731 crore.

• Net profit fell 35.4% to Rs 2,205 crore. Analysts expected Rs 2,385 crore.

• Ebitda margin at 9.5% vs 15.8%.

"Novelis had a good quarter, the copper business did well, downstream aluminium business doubled its Ebitda. But because the cost of production dramatically went up, the upstream aluminium business had a big impact on margins," Pai said.

However, the long-term outlook on non-ferrous metals is very strong, Pai said. "The problem is that the Russia-Ukraine war has created a whole set of macroeconomic uncertainties. Uncertainty level in global economics is too high now," he said.