Hindalco Industries beat analyst estimates on all fronts as its consolidated net profit doubled to a record Rs 3,851 crore for the quarter ended March 31. The earnings were driven by a strong performance in the India business, supported by favourable macros, strategic product mix and an improved performance by the downstream business.
The company’s consolidated revenue from operations rose 38% y-o-y to Rs 55,764 crore. There was also a sharp rise in consolidated Ebitda, which soared 30% y-o-y to Rs 7,597 crore, primarily due to a favourable macro environment, higher volumes, better operational efficiencies, and improved performance of downstream business offset by higher input costs.
Satish Pai, MD, Hindalco, 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 optimisation. Our strategy to build a more sustainable business model that is isolated from metal cycles is working very well for us.”
The company has also allocated over 70% of its growth capex to value-enhancing downstream segments, and all the growth capex for the next five years will be funded out of internal accruals.
Pai said that the company will be spending Rs 3,000 crore as capex in FY23 to execute expansion of its downstream projects. “We are now flat out on the downstream side as we have no more capacity and the demand whether from building and construction, pharmaceuticals or transportation that comes with trucks and two-wheelers is very high and we cannot meet that anymore. So, we have to expand our capacity,” he said.
The company’s current aluminium upstream capacity is 1.3 million tonne and downstream value added is at 400 KT. In the next five years, Pai said, the plan is to make that 400 KT to 600-700 KT. However, the company will look at expanding the 1.3-million tonne capacity only after it has more green energy source to expand on the smelting side. While a large part of capex will go towards expanding value-added downstream capacity, the company plans to expand alumina refining in Odisha if it gets a bauxite mine, Pai added.
Hindalco subsidiary Novelis reported quarterly adjusted Ebitda of $431 million, down 15% y-o-y, primarily due to cost inflation, semiconductor shortage in automotive and other short-term operational issues, and a non-recurring regulatory provision taken in the quarter. Novelis reported an adjusted Ebitda per tonne of $437 in Q4FY22, compared with $514 in the prior year.
The Indian aluminium business’ Ebitda was at an all-time high of Rs 4,050 crore in Q4FY22, an increase of 123% y-o-y. Ebitda margins were at 41%.
Operating income from the copper business stood at Rs 387 crore, up 20% y-o-y, on the back of better operational efficiencies and improved by-product realisations. Revenue was Rs 9,787 crore this quarter, up 15% y-o-y, primarily due to higher global prices of copper and higher volumes.
Hindalco’s consolidated net profit for the full year ended March 31 jumped nearly four times to Rs 13,730 crore, while revenue for the year was up a good 48% to Rs 1.95 trillion. The consolidated Ebitda for the year at Rs 30,056 crore was up 59% versus FY21, while Ebitda margin stood at 15%, higher by 70 basis points. Consolidated net debt to Ebitda was at a strong 1.36x on March 31, 2022, compared with 2.59x on March 31, 2021.
The company said Aleris Integration work continues with over $110-million run rate combination cost synergies achieved. Novelis announced $3.4 billion of strategic capital investments towards transformational organic growth over the next five years.