Hindalco Industries Limited (“Hindalco”) is the metals flagship company of the Aditya Birla Group. A $26 billion metals powerhouse, Hindalco is the world’s largest aluminium company by revenues and a major player in copper. It is also one of Asia’s largest producers of primary aluminium. Its wholly-owned subsidiary Novelis Inc. is the world’s largest producer of aluminium beverage can stock and the largest recycler of used beverage cans (UBCs). Hindalco’s copper facility in India comprises a world-class copper smelter, downstream facilities, and a captive jetty. Hindalco’s global footprint spans 50 manufacturing units across 10 countries.
| Stock Details | |
| Market Cap. (Cr.) | 99854 |
| Equity (Cr.) | 224.72 |
| Face Value | 1 |
| 52 Wk. high/low | 636 / 309 |
| BSE Code | 500440 |
| NSE Code | HINDALCO |
| Book Value (Rs.) | 404.45 |
| Sector | Non-Ferrous Metals |
| Key Ratios | |
| Debt-equity: | 0.91 |
| ROCE (%): | 15.45 |
| ROE (%): | 18.97 |
| TTM EPS: | 61.65 |
| P/BV: | 1.10 |
| TTM P/E: | 7.21 |
Financial Performance:
Shareholding Pattern:
- Revenue of Hindalco has grew marginally on YoY basis by 5.73%, whereas it declined by 5.38% sequentially to Rs.53,151 cr. in Q3FY23. Company has clocked PAT of Rs.1,362 cr. in the Dec. quarter, a decline of 38.23% QoQ and 62.79% YoY.
- EBITDA margin of the company shrunk on both sequential as well as YoY basis by 277 bps and 774bps respectively to 7.36%, due to elevated input costs, unfavourable macros and inflationary impacts.
- Hindalco generated its record total shipments of India primary aluminium at 349Kt as against 345Kt in Q3FY22 up by 1% on YoY basis.
- Novelis’ revenue in Q3FY23 stood at $4.2 billion, down by 3% on YoY basis, an EBITDA of $341 million, down by 33% on YoY basis, primarily due to lower shipments, less favourable metal benefits from recycling, unfavourable foreign exchange.
- Aluminium Upstream EBITDA stood at ₹1,591 crore in Q3 FY23, down by 52% on YoY basis, impacted by higher input costs and unfavourable macros. Upstream EBITDA margins were at 19.8% and continue to be one of the best in the global industry.
- Aluminium Downstream EBITDA stood at ₹157 crore in Q3 FY23, an increase of 24% on YoY basis, primarily due to better pricing of downstream products.
- EBITDA for the Copper Business was at ₹546 crore in Q3 FY23 up by 40% on YoY basis, on the back of stable operations, higher volumes of CC rods, better TC/RCs and realisations.
- Consolidated Net Debt to EBITDA remained strong at 1.60x on December 31, 2022 compared to 1.62x on December 31, 2021.
Managerial commentary:
Mr. Satish Pai, MD, Hindalco Industries, said: “We are seeing core industries worldwide being buffeted by macro-economic and inflationary cost pressures, yet we delivered a strong operational performance with higher volumes across India business segments. Though the India Aluminium upstream business EBITDA came under pressure from the surge in input costs and lower realisations, this was partially offset by higher volumes. The India Aluminium downstream business segment delivered a higher EBITDA YoY, due to higher volumes and better pricing. The Copper business registered a 40% growth in EBITDA driven by higher volumes and better realisations, supported by a robust domestic demand. Despite the hits of this quarter due to external factors, we believe the long-term story remains positive backed by our strong balance sheet and resilient business model.”
Outlook:
Hindalco reported muted Q3FY23 results with marginal growth in revenue and decline in EBITDA and PAT magins on both sequential and YoY basis, impacted by rising input costs and unfavourable macros, partially offset by better operational performance of copper and downstream businesses. For the 9MFY23 Hindalco has reported the earnings of Rs.34.57 and we expect the company to close the FY23 at the eEPS of Rs.46.09. Based on the estimated earnings the company is available at PEx of 9.64 at the CMP.
Results:
| Particulars (In Rs. Cr.) | Q3FY23 | Q2FY23 | Q3FY22 | QoQ% | YoY% | 9MFY23 | 9MFY22 | YoY% |
| Revenue from Operations | 53,151 | 56,176 | 50,272 | -5.38% | 5.73% | 1,67,345 | 1,39,295 | 20.14% |
| Other Income | 366 | 328 | 181 | 11.59% | 102.21% | 905 | 843 | 7.35% |
| Total Income | 53,517 | 56,504 | 50,453 | -5.29% | 6.07% | 1,68,250 | 1,40,138 | 20.06% |
| Cost of Materials Consumed | 32,670 | 34,285 | 33,107 | -4.71% | -1.32% | 1,02,268 | 89,214 | 14.63% |
| Trade Purchases | 989 | 312 | 342 | 216.99% | 189.18% | 1,421 | 991 | 43.39% |
| Changes in Inventories | 703 | 570 | -2,819 | 23.33% | NA | 1,182 | -7,096 | NA |
| Employee benefits expense | 3,259 | 3,210 | 3,010 | 1.53% | 8.27% | 9,503 | 8,959 | 6.07% |
| Power and Fuel | 4,472 | 5,004 | 2,907 | -10.63% | 53.84% | 13,494 | 7,908 | 70.64% |
| Impairment Loss/ (Reversal) of Non-Current Assets (Net) | 16 | 53 | 59 | -69.81% | -72.88% | 69 | 155 | -55.48% |
| Impairment Loss/ (Reversal) on Financial Assets (Net) | 45 | 5 | 3 | 800.00% | 1400.00% | 54 | 154 | -64.94% |
| Other Expenses | 7,449 | 7,375 | 6,351 | 1.00% | 17.29% | 22,015 | 17,967 | 22.53% |
| EBITDA | 3,914 | 5,690 | 7,493 | -31.21% | -47.76% | 18,244 | 21,886 | -16.64% |
| EBITDA Margin (%) | 7.36% | 10.13% | 14.90% | -277 bps | -754 bps | 10.90% | 15.71% | -481 bps |
| Finance Cost | 934 | 879 | 852 | 6.26% | 9.62% | 2,660 | 2,963 | -10.23% |
| Depreciation & Amortisation expense | 1,768 | 1,713 | 1,683 | 3.21% | 5.05% | 5,230 | 4,968 | 5.27% |
| Share in Profit/ (Loss) in Equity Accounted Investments | 2 | 2 | 3 | 0.00% | -33.33% | 7 | 5 | 40.00% |
| Exceptional Income/ (Expenses) (Net) | 0 | 0 | 237 | NA | -100.00% | 41 | 833 | -95.08% |
| Profit Before Tax | 1,214 | 3,100 | 5,198 | -60.84% | -76.64% | 10,402 | 14,793 | -29.68% |
| Tax | -148 | 895 | 1,538 | NA | NA | 2,716 | 4,452 | -38.99% |
| Profit After Tax | 1,362 | 2,205 | 3,660 | -38.23% | -62.79% | 7,686 | 10,341 | -25.67% |
| PAT Margin (%) | 2.56% | 3.93% | 7.28% | -137 bps | -472 bps | 4.59% | 7.42% | -283 bps |
| EPS (in Rs.) | 6.13 | 9.92 | 16.53 | -38.21% | -62.92% | 34.57 | 46.50 | -25.66% |
| Segment Income (In Cr.) | Q3FY23 | Q2FY23 | Q3FY22 | QoQ% | YoY% | 9MFY23 | 9MFY22 | YoY% | Segment % |
| Novelis | 34,685 | 38,321 | 32,396 | -9.49% | 7.07% | 1,12,295 | 91,336 | 22.95% | 62.29% |
| Aluminium Upstream | 8,046 | 8,215 | 8,019 | -2.06% | 0.34% | 24,960 | 21,591 | 15.60% | 14.45% |
| Aluminium Downstream | 2,647 | 2,884 | 2,885 | -8.22% | -8.25% | 8,271 | 7,727 | 7.04% | 4.75% |
| Copper | 10,309 | 9,658 | 10,255 | 6.74% | 0.53% | 30,496 | 26,936 | 13.22% | 18.51% |
| Total | 55,687 | 59,078 | 53,555 | -5.74% | 3.98% | 1,76,022 | 1,47,590 | 19.26% | 100.00% |
| Less: Adjustment on account of different accounting policies for Novelis Segment | 965 | 1,107 | 684 | -12.83% | 41.08% | 3,077 | 1,467 | 109.75% | – |
| Less: Inter-segment revenue | 1,571 | 1,795 | 2,599 | -12.48% | -39.55% | 5,600 | 6,828 | -17.98% | – |
| Income from Operations | 53,151 | 56,176 | 50,272 | -5.38% | 5.73% | 1,67,345 | 1,39,295 | 20.14% | – |
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