Hindalco Q3 net profit jumps 96% to Rs 3,675 crore

Satish Pai, managing director, Hindalco Industries told FE that with debt levels under control, the company would focus more on growth going forward.

Hindalco Industries reported a 96% year-on-year increase in its net profit at Rs 3,675 crore for the third quarter ended December 31, 2021. The company management said that with debt at comfortable levels, the focus would be on growth going forward rather than deleveraging. The performance of the Aditya Birla Group metals flagship company was driven by a consistent performance by Novelis and a strong performance by its India business, supported by high aluminium prices, good demand off-take, strategic product mix and an improved performance by the downstream business.

The company’s consolidated revenue from operations surged a good 44% y-o-y to Rs 50,272 crore. The consolidated Ebitda (earnings before interest, tax, depreciation and amortisation) at `7,624 crore was up a sharp 38% y-o-y. However, despite tight cost control measures, high prices of coal along with other input costs impacted the Ebitda margins, which dropped a marginal 60 basis points to 15.2%. 

The company’s consolidated net debt to Ebitda came in at a strong 1.62x as of December 31, 2021 versus 2.59x as of March 31, 2021, with which the company said that it is putting brakes to its deleveraging exercise.  Satish Pai, managing director, Hindalco Industries told FE that with debt levels under control, the company would focus more on growth going forward. “As we generate cash we will be announcing more and more organic projects. We have finished deleveraging and we are focussed on growth now,” said Pai.

“We have already announced over Rs 3,000 crore investments in our downstream pipeline – Hirakud and Silvassa, and the acquisitions of Ryker and Hydro’s Kuppam units. Novelis too has announced capital projects that align market growth with sustainability considerations. The $365 million closed-loop recycling and casting centre for the North American market is one such example,” he said. In addition, Hindalco has already planned an investment of Rs 825 crore under the government’s Production Linked Incentive (PLI) scheme.

Novelis recorded quarterly adjusted Ebitda of $506 million up 1% y-o-y, on the back of strong product pricing and mix as well as favourable metal benefits, which mitigated inflationary cost pressures and supply chain disruption-related costs. Novelis reported an adjusted Ebitda per tonne of $544 in Q3FY22, an increase of 1% y-o-y. 

India aluminium Ebitda was at an all-time high of Rs 3,376 crore an increase of 131% y-o-y, primarily due to favourable macros, higher volumes, better operational efficiencies and improved performance of downstream business. Ebitda margins were at 41% and continue to be the best in the industry, Pai said.

Copper Ebitda stood at Rs 390 crore during the quarter registering an increase of 63% y-o-y on the back of higher volumes, better operational efficiencies and improved by-product realisations.

In terms of the outlook on demand, Pai said that the Budget 2022 made clear the Indian government’s intent and impetus on infrastructure. “We foresee a surge in demand for aluminium and copper and are well-positioned to serve the market,” he said.  As for aluminium prices, he said that LME will hover at the current levels of $3000 in the foreseeable future.