Hindalco Q1 net profit rises 48% to record high, EBITDA grows

Metals major Hindalco saw its net profit hit a record high for the quarter ended June 2022 on the back of good performance by aluminium and copper businesses. The company also reported its best-ever quarterly profitability levels on account of better macros, and robust performance of its aluminium downstream and copper subsidiaries.

The Aditya Birla Group company reported a net profit of ₹4,119 crore during the quarter under review, as compared to ₹2,787 crore in the corresponding period of the previous fiscal. The bottomline increased 7% sequentially from ₹3,851 crore in the March quarter. Revenue from operations increased to ₹58,018 crore in the period from ₹41,358 crore, marking a rise of over 40% in the June quarter of FY23.

Hindalco’s profitability also improved during the period, as earnings before interest, taxes, depreciation and amortisation (EBITDA) reached an all-time of ₹8,640 crore, up 27% on-year from ₹6,790 crore in the same period last year. Meanwhile, finance costs declined 3% annually to ₹847 crore from ₹820 crore a year ago.

“The results were driven by an excellent performance by Novelis, and a robust performance by aluminium downstream and copper businesses, supported by operational efficiencies and higher volumes,” Hindalco Industries says in an exchange on Wednesday. “Novelis reported its best-ever quarterly EBITDA and EBITDA per ton, primarily due to higher product pricing, favourable product mix and recycling benefits.”

Novelis, the flat-rolled aluminium producing and aluminium recycling arm of Hindalco, registered record adjusted EBITDA of $561 million, up 1% year-on-year, and adjusted EBITDA per tonne of $583. “This underlying increase is primarily due to higher product pricing, favorable product mix and higher recycling benefits, partially offset by high-cost inflation, unfavorable foreign currency, and a $47 million prior year tax litigation benefit not recurring in the current year,” the company says.

Aluminium upstream EBITDA in Q1 FY23 was ₹3,272 crore, compared with ₹2,317 crore for Q1 FY22, an increase of 41% YoY, while EBITDA margins for the segment were at 38%. Aluminium downstream EBITDA stood at ₹158 crore in Q1 FY23, compared with ₹39 crore for Q1 FY22, an increase of 305% y-o-y, underpinned by better pricing of downstream products. EBITDA per ton for aluminium downstream stood at $261 in Q1 FY23, against $64 in Q1 FY22, an increase of 306% y-o-y.

Hindalco reported record EBITDA of ₹565 crore for its copper business in Q1 FY23, up 116%, compared to ₹261 crore in Q1 FY22. The gains were due to higher domestic sales, better operational efficiencies and improved by-product margins, the company says.

“Our performance was backed by strong operational efficiencies and pre-emptive sourcing of critical raw material, thus ensuring stable operations and higher margins. Our business model supports our position as an integrated aluminium producer with one of the world’s best EBITDA margins,” says Satish Pai, managing director, Hindalco Industries.

“Our product mix enhancement strategy is working well with the aluminium downstream EBITDA growing four-fold y-o-y... Looking ahead, we remain focused on riding all market cycles with our greener, stronger, smarter approach,” he further adds.

Spurred by the stellar quarterly performance, Hindalco Industries stock rose to ₹439.20, up 17.75 points or 4.21%. With the results, the scrip had touched the intraday high of ₹444.20 after opening at ₹424 earlier today.