Tag: Hindalco Industries

Hindalco shares gain post Novelis results, an analyst awaits better entry point

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Atlanta-based Novelis Inc, a wholly-owned subsidiary of the Aditya Birla group’s Hindalco Industries, reported a 28% year-on-year growth in operating profit or EBITDA at $514 million, driven by higher volumes, lower cost of production, and improved pricing. This resulted in EBITDA per tonne of $540, which was higher than the management’s EBITDA guidance of $525 per tonne.

Following Novelis’ March quarter earnings announcement, domestic brokerage firm Nuvama Institutional Equities has increased its FY25 and FY26 consolidated EBITDA estimates by 13% and 12%, respectively, to factor in higher aluminium prices.

Moreover, the brokerage has also upped its EV/EBITDA multiple to 6.5 times from 6 times earlier to factor in the sustainability of Novelis’ earnings and higher profitability in Indian operations.

According to Nuvama, the management is cautious in raising EBITDA per tonne guidance beyond $525 despite the implementation of cost-cutting measures done last year. Q4 numbers, as per the brokerage, restore confidence in the robustness of its business model.

Shares of Hindalco Industries Ltd. have rallied nearly 32% in the last six months. Nuvama has maintained a ‘Hold’ rating on the counter, saying it would await lower entry points to re-enter the stock.

The brokerage, however, increased its target price to ₹651 per share from ₹508 apiece earlier. The stock has run up sharply, Nuvama said while seeing limited upside going ahead.

Nuvama in a note said that Novelis’ net debt declined to $4.3 billion from $4.6 billion in the third quarter of FY24 on release of WC ($455 million), normally a year-end phenomenon. Still, it sees higher capex ($2 billion in each of FY25 and FY26), which it said should keep debt higher in FY25 to FY26.

“We expect debt to rise to $5.4 billion in FY26E (net debt/EBITDA of 2.4 times). Benefits of its $4.1 billion Bay Minette project (to be commissioned by FY27-end) are likely to start accruing FY28 onwards,” the brokerage stated.

Global brokerage Jefferies has maintained a ‘Buy’ recommendation on Hindalco but upped its price target to ₹810 from ₹700 per share earlier. The broking firm said the company’s earnings outlook is improving with demand for beverage cans inflecting upwards.

Novelis margins are at seven-quarters higher, and a rise in aluminium prices is expected to lift India margins, Jefferies said.

The foreign brokerage has raised its FY25-FY26 earnings per share estimates by 2-3%. Jefferies also said that Hindalco’s valuations at 6.1 times FY25 EV/EBITDA estimates are reasonable.

Another top brokerage CLSA has maintained a ‘buy’ on Hindalco, with a target price of ₹770 per share. The brokerage said that Novelis sees further levers for margin improvement, such as price revisions, a rise in recycling content and operating efficiencies.

In its note, CLSA said that capex has been guided at $1.8 billion-$2.1 billion, which could drive up leverage but remain below 3 times. The brokerage believes that debt reduction is in line with seasonality.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Hindalco gets an upgrade from CLSA, citing “overdone concerns”

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Shares of Hindalco Industries Ltd gained 2% in trade Friday after global broking firm CLSA upgraded the stock to ‘Buy’ from ‘Underperform’ earlier, citing the company’s existing businesses remain strong with gradual improvement in profitability.

Following a sharp correction, the foreign brokerage believes concern is overdone for the Aditya Birla group company. CLSA maintains target price at ₹635 per share, implying an upside potential of 25% from the current market levels.

However, CLSA suggested a further 10-12% downside from the current market levels in its bear case scenario.

The drop in Hindalco’s share price has largely been triggered by the company’s US-based subsidiary Novelis announcing a delay in completion and an increased capital for the Bay Minette project.

Novelis is a maker of flat-rolled aluminium products used in building products ranging from beverage cans to aeroplanes.

The company also revised the return guidance for the Bay Minette project to mid-teens from double digits, sending the parent company’s stock price spiralling.

The global brokerage said that clarity on the use of cash and growth projects are key points to watch for.

Novelis Inc has recently filed for an initial public offering (IPO) with the Securities and Exchange Commission (SEC). Novelis has confidentially submitted a draft registration statement on form F-1 with the SEC relating to the proposed primary stake sale of its common shares. The common shares are expected to be offered by Novelis’ sole shareholder AV Minerals (Netherlands), a fully owned subsidiary of Hindalco.

According to the regulatory filing with US bourses, Novelis would not receive any proceeds from the sale of common shares by its sole shareholder.

The foreign brokerage questioned the motives of the IPO, whether it was for value-unlocking purposes or to build a war chest. Therefore, a key monitorable to decode the motive will be to find clarity on the usage of cash, especially the influx following the public offer.

On Thursday, the stock settled 0.42% higher at ₹506.50 apiece on NSE. Hindalco shares have fallen 17% so far this year and gained 23% in the last one year.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Stocks to Watch: Hindalco Industries, TCS, ABB India, Union Bank of India, Swan Energy and more

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Hindalco Industries’ subsidiary Novelis submits documents with SEC to go public in US

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Novelis Inc, a wholly owned subsidiary of Hindalco Industries Ltd on Tuesday (February 20) announced the confidential submission with the Securities and Exchange Commission (SEC) for a proposed initial public offering (IPO).

The common shares are expected to be offered by Novelis’ sole shareholder (a subsidiary of Hindalco Industries), the company said in a release. Novelis will not receive any proceeds from the sale of common shares by Hindalco.

Aluminum solutions provider Novelis expects to complete the public offering after the SEC completes its review process, subject to market and other conditions.

Earlier in February, Hindalco Industries put its weight behind the Bay Minette project being developed by Novelis amid growing concern among the shareholders due to the cost overrun.

The project’s total capital cost has gone up 65%, according to Novelis. Hindalco in its financial report for Q3 of FY2024 revised the total capital expenditure of the project to $4.1 billion.

Hindalco in its financial report for Q3FY2024 revised the total capital expenditure of the project to $4.1 billion. The expected commissioning of the project has also been delayed by one year to the end of the calendar year 2026 or the second half of 2027.

In Q3 of FY2024, the net profit of the company fell by 23% quarter over quarter (QoQ) to $121 million from $174 million, in the quarter that ended September 2023.

The company reported adjusted EBITDA of $454 million in the third quarter of FY24. Novelis reported that adjusted EBITDA per tonne shipped was $499 and expects margins of around $525/tonne.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Hindalco clears air on financial viability of Novelis’ Bay Minette project after cost overrun

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Hindalco Industries has put its weight behind the Bay Minette project amid growing concern among the shareholders due to the cost overrun. The Bay Minette project, being developed by Hindalco’s subsidiary Novelis, is the first fully integrated aluminium plant built in the United States in nearly 40 years.

Novelis revised the return guidance for the Bay Minette project to double digits from the mid-teens earlier. The project’s total capital cost has gone up 65%, according to Novelis. Hindalco in its financial report for Q3FY2024 revised the total capital expenditure of the project to $4.1 billion. The expected commissioning of the project has also been delayed by one year to the end of CY2026 or the second half of 2027.

The company estimates that the project will start with the production of 600 kilotonnes of finished goods for the beverage packaging and automotive markets in North America.

Addressing the shareholders’ concern, Hindalco’s Managing Director, Satish Pai, said in an exclusive interview with CNBC-TV18 that the project is financially viable and returns are likely to improve in the second phase.

“This is a greenfield strategic project, where we set the base for further expansions. So we are getting 600 kt at this 4.1 billion, but for the next 600 kt, the capex will be from about $1500-2,500 a tonne. So for much less capex, we can double the capacity going forward. So I think, for Novelis, that is the world leader in aluminium rolling, this is a great strategic project. It is financially viable in phase one, and the returns will only improve when we do phase two,” he said.

Refuting any possibility of the Bay Minette project getting scrapped, Pai added, “We are absolutely committed to going forward because we are the world leaders, and the largest company by far in rolled products. And we think that it’s in our strategic interest to do this project.”

Pai mentioned that Novelis’ EBITDA per tonne will move to $600 before the Bay Minette Project is commissioned. He added that the project will have a cost advantage and the profit will be much higher.

Hindalco Industries reported a 71.1% rise in its net profit for the quarter ending in December 2023 riding on the decline in costs for the period under review.

Satish Pai expects the domestic aluminium EBITDA per tonne to hold around $880 and the copper performance to improve in the upcoming quarter.

“On the aluminium side $880 I think Q4 will be in a similar range because unless the LME moves upward, I think the EBITDA per tonne on the alminimumm business will be in that $800 to $900 which is by the way a fairly good level for us. The copper performance I think can be sustained in fact, I think Q4 should be probably a little bit better than Q3 if anything. So I think the Rs 6000 plus crores on the copper side can be sustained,” he added.

Meanwhile, brokerage firm Macquarie maintained an ‘outperform’ call on Hindalco stock at a target price of ₹570 per share. The brokerage observed that the company’s focus remains on completing downstream and alumina expansion projects.

According to Macquarie, the copper and aluminium segment drive EBITDA beat while copper EBITDA grew 20% year-on-year to ₹660 crore. The aluminium segment EBITDA grew 46% YoY led by lower coal cost. The company’s India business has a net cash balance now, the brokerage said.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Hindalco Industries plans ₹800-crore capex to tap EV market

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Aditya Birla Group company Hindalco Industries Ltd is planning to invest ₹800 crore to build a battery foil manufacturing facility in Odisha’s Sambalpur to tap the growing market for electric vehicles (EVs) and energy storage systems.

The battery foil plant will be commissioned by July 2025. It will initially produce 25,000 tonnes of the resilient product, which forms the backbone of Lithiumion and Sodium-ion cells.

By 2030, the demand for battery grade aluminium foil in India is expected to grow manifold to 40,000 tonnes, primarily driven by mushrooming growth in gigafactories for advanced cell manufacturing, Hindalco said in a filing.

“We are seeing a fast traction in battery materials demand, driven by an impressive outlook for the EV and Grid Storage sectors. Raw material localisation is critical in such strategic sectors,” said Satish Pai, Managing Director at Hindalco Industries.

“Hindalco is thus making various investments in battery materials and technologies towards building Atmanirbhar Bharat. Investment in this new battery foil mill is another such step in this direction,” Pai said.

The company shared: “Hindalco has already achieved the technology breakthrough of manufacturing fine quality battery foils at its Mouda unit in Maharashtra. The Mouda unit is currently in the process of qualifying with Lithium-ion cell manufacturers in India, Europe and the United States. The new unit in Odisha will further augment capability to supply material
to Gigafactories across the world.”

Hindalco said this project will provide a thrust to the government’s green initiative to reduce carbon emissions and build sustainable growth. Additionally, the company is working closely with original equipment manufacturers (OEM) to co-develop and make critical components like battery enclosures, motor housings, busbars, structural and safety components, and lightweight load bodies, many of which are being designed and developed for the first time in India.

“These series of investments catalyse Hindalco’s metamorphosis from a manufacturer of metal to a provider of high-tech metal solutions,” the statement read.

Shares of Hindalco Industries Ltd gained 2.36% to trade at ₹534.75 apiece on the NSE. The scrip has risen 9.76% so far this year and 15.60% in the last one year.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Hindalco expects cost of production to be flat in third quarter as coal prices firm up

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Hindalco Industries’ aluminium segment reported an EBITDA (earnings before interest, taxes, depreciation, and amortization) of $750 per tonne for the quarter ending September 2023. However, the Aditya Birla Group anticipates a steady EBITDA per tonne for the next quarter.

Satish Pai, the Managing Director, attributed the third quarter projection to stabilisation in coal prices, clarifying that the previous quarter’s EBITDA was influenced by a 15% reduction in coal costs. Despite the ongoing firming of coal prices in Q3, Hindalco expects production costs to remain stable, maintaining the EBITDA per tonne at the same level as in the previous quarter.

His remark came as in the Indian aluminium segment, Hindalco’s upstream business EBITDA was ₹2,074 crore, up 7% QoQ and downstream EBITDA was ₹171 crore, an increase of 16% QoQ due to higher shipments in the September quarter.

Reflecting on the London Metal Exchange (LME) price outlook, Pai said, “Prices will hover near $2,200-2,300 per tonne till the macroeconomic environment gets clearer, people get more comfortable with the US economy, interest rates, and Chinese demand. Most of it seems to be more on a positive trend.”

He, however, pointed to the war in the Middle East because of which risks remain and commodity prices, including oil, have been trending downwards. Therefore, LME supply-demand is very tight.

Hindalco MD also spoke about the firm’s US subsidiary Novelis, he noted that the October to December 2023 quarter shall witness a sequentially lower EBITDA per tonne because the third quarter falls between the holiday season and maintenance shutdown.

“Most of the large mills shut down over Christmas and New Year, which is why Novelis has guided $450 to $500 EBITDA per tonne for Q3. But in quarter four, it will bounce back very strongly. We are very confidently guiding the EBITDA per tonne to be $525 a tonne and the EBITDA to be about $500 million in quarter four,” Pai said.

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Hindalco Q2 Results: Consolidated profit flat at ₹2,196 crore; Novelis on recovery path

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Aditya Birla Group company Hindalco Industries Ltd on Friday (November 10) announced that its consolidated net profit fell by a marginal 0.4% year-on-year (YoY) to ₹2,196 crore for the September quarter. Consolidated revenue also fell 3.5% YoY to ₹54,169 crore for the period.

However, on a standalone basis, its net profit jumped 54.6% YoY to ₹847 crore for the quarter under review, while revenue also rose 12.5% to ₹20,676 crore.

The mining company reported a standalone bottomline and topline of ₹548 crore and ₹18,382 crore, respectively, in the corresponding quarter of last fiscal.

Hindalco’s operating profit, calculated as EBITDA, rose 27.5% to ₹1,756 crore during the period. The same was ₹1,377 crore in the year-ago quarter. The operating margin stood at 8.5%.

All the business segments of Hindalco experienced improved performance on a sequential basis. The copper business achieved its highest quarterly EBITDA of ₹653 crore, a 23% rise QoQ, driven by highest-ever metal shipments.

Its arm Novelis reported another quarter of sequential improvement in adjusted EBITDA and EBITDA per ton backed by higher shipments, largely from beverage cans. The subsidiary contributes to more than 70% of Hindalco’s consolidated operating profit or EBITDA.

In the Indian Aluminum segment, the Upstream Business EBITDA was ₹2,074 crore, up 7% QoQ, and Downstream EBITDA was ₹171 crore, an increase of 16% QoQ due to higher shipments.

In a exchange filing, the company said that it has maintained a strong balance sheet and liquidity with a net debt-to-EBITDA ratio well below 2 times, positioning it well for organic growth.

“Hindalco continues to demonstrate Sustain-Ability, through a performance that is robust and consistent. We have maintained momentum driven by our focus on cost control and a solid performance by all our downstream segments,” said Satish Pai, Managing Director, Hindalco Industries.

Brokerage house Equirus has maintained its ‘Add’ rating on Hindalco with a share price target of ₹535 for December this year. The brokerage has raised its EBITDA per tonne estimates for fiscal 2024 – 2026 by 5% to 8% in order to factor in a better-than-expected second-quarter.

While Nuvama has maintained its ‘Hold’ rating on Hindalco, the brokerage has raised its price target to ₹552 from ₹492 earlier. Nuvama has also raised its consolidated EBITDA estimates for financial year 2024 and 2025 by 7% and 1%, respectively.

Following the quarterly earnings, shares of Hindalco Industries Ltd climbed 0.093% to trade at ₹484.90 apiece on the NSE. The scrip is almost flat since the beginning of this year, while it has risen 16.60% in the last one year.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Hindalco to invest Rs 2,000 crore in copper and e-waste recycling unit — first ever in India

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Aditya Birla Group flagship Hindalco Industries Limited is planning to make an investment of Rs 2,000 crore to establish the first-of-its-kind copper and e-waste recycling facility in India. The move addresses the mounting challenge posed by e-waste, recognised as the foremost waste stream on a global scale, said Aditya Birla Group Chairman Kumar Mangalam Birla while addressing shareholders of Hindalco at the 64th annual general meeting (AGM) on Tuesday, August 22.

He said the hazardous nature of e-waste is compounded by improper handling, leading to a significant loss of valuable materials. “At present, due to lack of advanced metal extraction and refining technologies domestically, a substantial volume of e-waste is exported to other nations. Bringing this cutting-edge technology to India marks a transformative step towards offering a tangible solution, aligned with your company and in fact, our nation’s circular economy agenda,” Birla added.

Hindalco‘s copper business achieved an all-time high EBITDA of Rs 2,253 crore in FY23, reflecting a 62 percent year-on-year increase, driven by robust market demand, stable operations and higher value-added product sales. “Our copper business has now emerged as a top three copper rod player globally (outside of China),” the Hindalco chairman said.

Hindalco Q1 numbers

Hindalco, the world’s s largest aluminium company by revenue, posted a 41 percent year-on-year drop in consolidated profit at Rs 2,454 crore for the June quarter compared with a profit of Rs 4,119 crore in the same quarter last year. The Aditya Birla Group’s metals flagship said its profit grew 2 percent sequentially, driven by recovery in Novelis and Aluminium India downstream business, and backed by a steady performance by the copper business.

“Unfavourable macros and subdued volumes weigh on performance,” said Shreyansh Shah, Research Analyst, StoxBox.

Consolidated revenue from operations rose to Rs 52,991 crore against Rs 58,018 crore in the corresponding quarter last year. Consolidated net debt to EBITDA stood at 1.73 times as of June 30 against 1.39 times as of March 31, the metals producer said.

Novelis reported a sequential improvement in quarterly adjusted EBITDA and EBITDA per tonne, reflecting favourable product-mix and record automotive shipments.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Hindalco inks deal with Texmaco to make aluminium rail wagons and coaches

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Aditya Birla Group flagship Hindalco Industries Ltd has tied up with Texmaco Rail & Engineering Ltd, a specialised engineering company, to develop and manufacture world-class aluminium rail wagons and coaches that will help Indian Railways achieve its emission goals and bolster operating efficiency, the company said in a filing on Thursday.

Shares of Hindalco were almost flat in trade today. At 12:54 pm, the scrip gained 0.043 percent to Rs 469.10 apiece on the NSE. The stock has rallied 10 percent in the last one month. On a year-to-date basis, Hindalco shares are down 4 percent, while it rose 6.61 percent in the last one year.

The aluminium major said that Indian Railways has launched ‘Mission 3000 MT’ with a target of doubling freight capacity to reach 3,000 million tons by 2027 through augmentation of rolling stock, with the objective of achieving 45 percent market share in freight.

To meet this ambitious target, the Railways is actively seeking to improve wagon design, and inviting wagon manufacturers to contribute their own designs to enhance overall capacity and the life of railway assets, Hindalco said.

“Recognising these developments in the Railways, Hindalco and Texmaco have joined hands to explore opportunities, where Hindalco will provide profiles, sheets and plates of its unique aluminium alloys, along with fabrication and welding expertise,” it said.

The company’s in-house aluminium freight rake launched last year is 180 tons lighter and offers 19 percent higher payload to tare weight ratio, consumes less energy with relatively negligible wear and tear. Texmaco, being an expert in manufacturing freight cars for 80 years, will bring in technical expertise and be responsible for design, setting up the factory, production line and providing skilled workers.

“With launch of India’s first aluminium rake, we have demonstrated the benefits of higher payload and significant CO2 reduction that aluminium rakes offer. This partnership will further strengthen our role in enhancing the value proposition for the freight industry as well as for passenger mobility, while helping the Railways achieve its net zero objectives,” said Satish Pai, Managing Director at Hindalco.

“This valuable partnership will go a long way in creating innovative and sustainable products further reinforcing our commitment towards reducing the industry’s carbon footprint and driving a positive environmental impact,” said Indrajit Mookerjee, Vice Chairman, Texmaco Rail & Engineering.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow