Hindalco Industries, the metals flagship of the Aditya Birla Group, is poised to deliver a strong set of Q2FY25 numbers, driven by stellar performance in the aluminum segment. However, its US subsidiary, Novelis, is expected to weigh on growth due to operational disruptions.
Key expectations for Q2FY25
– Revenue: Analysts project consolidated revenue to rise 4.5 percent year-on-year to around Rs 56,581 crore, compared to Rs 54,169 crore reported in the same quarter last year. The increase was attributed to higher aluminum exports and improved steel premiums.
– EBITDA: Consolidated EBITDA is likely to increase by 29 percent to Rs 7,212 crore, from Rs 5,612 crore in Q2FY24. The increase was driven by strong aluminum prices and lower input costs, mainly due to lower coal prices in India.
– PAT: Net profit is expected to jump 54 percent year-on-year to around Rs 3,381 crore, compared to Rs 2,196 crore last year, boosted by higher margins and improved profitability in domestic operations.
The strong performance of aluminum reduces the weakness of Novelis
While the aluminum division is expected to perform better, Novelis’ results are expected to be softer than expected. Novelis faced major challenges, including production disruptions at its Sierre plant in Switzerland, which was affected by severe flooding. This resulted in additional costs of $61 million, largely exacerbated by restructuring and impairment costs.
The aluminum segment benefited from higher average LME aluminum prices, which rose 10 percent year-on-year. Additionally, average alumina prices rose 51 percent, supporting rising profits.
Independent performance is strong
Hindalco’s standalone business is expected to flourish, with revenue likely to grow 4 percent to Rs 21,501 crore, compared to Rs 20,676 crore last year. Standalone EBITDA may see a robust increase of 47 percent, reaching Rs 2,574 crore, driven by improved operational performance and lower energy costs. Net profit of the standalone segment is forecast to rise 51 percent to Rs 1,281 crore.
Outlook: Favorable trends in aluminum, but copper remains strong
Analysts expect continued strength in the aluminum segment, supported by higher prices and lower raw material costs. However, the copper segment is expected to see flat sales volumes quarter-on-quarter, providing limited upside.
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