Hindalco Q4 net profit more than triples but misses Street estimate

Aditya Birla Group company Hindalco Industries on Thursday reported a more than three-fold jump in net profit for the quarter ended March 31, 2022 but still missed market expectations.

The metals giant, which has a presence across aluminium and copper verticals, posted a standalone net profit of Rs 1,601 crore compared with Rs 495 crore in the three months ended March 31, 2021.

However, analysts were expecting net profit in the Rs 1,800-2,100 crore range and it missed that level.

Standalone revenue, however, came in line with the lower end of what various brokerage houses had pencilled in. At Rs 18,969 crore, revenue grew 31.6%. Analysts were expecting this to be in the Rs 18,000-21,000 crore range.

The company’s board has recommended a dividend of Rs 4 per share for FY22 as against Rs 3 a share the previous year.

Others Highlights

1) Consolidated net profit doubled year on year to an all-time high of Rs 3,851 crore.

2) Consolidated EBITDA was up 30% at Rs 7,597 crore.

3) Consolidated Net Debt to EBITDA declined to 1.36x as of March 31, 2022 vs 2.59x as of March 31, 2021.

4) Consolidated revenue for the fourth quarter stood at Rs 55,764 crore (vs Rs 40,507 crore), up 38% YoY.

5) Novelis adjusted EBITDA fell to $431 million from $505 million a year earlier, due to cost inflation, semiconductor chip shortages in automotive and other short-term operational issues, and a non-recurring regulatory provision.

6) Novelis reported an adjusted EBITDA per ton of $437 in Q4 FY22, compared with $514 in the prior year.

7) India aluminium business reported record EBITDA of Rs 4,050 crore, compared with Rs 1,819 crore for Q4 FY21.

8) India aluminium business EBITDA rose due to favourable macros, higher volumes, better operational efficiencies and improved performance of downstream business offset by higher input costs; EBITDA margins were at 41%.

9) EBITDA for the copper business rose to Rs 387 crore in Q4 from Rs 322 crore a year ago on the back of better operational efficiencies and improved by-product realisation.

10) Revenue from copper business was Rs 9,787 crore, up 15% YoY, primarily due to higher global prices of copper and higher volumes.

Management Commentary

Hindalco Managing Director Satish Pai said: “With record profitability in the fourth quarter, we had a very good end to the year. We attribute Hindalco’s highest-ever profits not just to strong macros, but also our consistent focus on operational excellence and cost optimization.”

Pai said Hindalco remains one of the world’s lowest cost and highest EBITDA margin producers of aluminium.

“Our strategy to build a more sustainable business model that is isolated from metal cycles is working very well for us. In line with this, we have allocated over 70% of our growth capex to value-enhancing downstream segments. All our growth capex for the next five years will be funded out of internal accruals,” he said.