Hindalco aluminium business up 147% to INR 876 crore in Q3 2017 driven by strong performance

Hindalco Industries, the Aditya Birla flagship company reported a net income of INR 320.56 crore in Q3 2017 against a loss of INR 32.49 crore YOY, driven by strong operational performance and recovery in aluminium prices.

Revenue during the quarter grew by 13.8% to INR 9,914.8 crore compared with INR 8,715.9 crore YOY, driven by increase in average realisation for both copper and aluminium, higher aluminium volumes, supported by weak rupee.

Operating profit increased 75.5% to INR 1,185 crore and margin expanded by 420 basis points to 11.9 % compared with year-ago quarter, majorly aided by aluminium business and lower power & fuel cost that dropped 13.2% to INR 1,429.5 crore.

Other income, which also boosted bottom-line, increased 20% YOY to INR 220 crore while tax expenses for the quarter stood at INR 139 crore against tax credit of INR 5.8 crore in corresponding quarter of last fiscal.

Aluminium business in Q3 increased 8.6% YOY to INR 4,916.9 crore, with its EBIT (earnings before interest and tax) growing 147% to INR 876 crore driven by higher realisation.

Coal linkage has helped the company achieve higher realization. "In addition to Gare Palma IV/4 and Gare Palma IV/5 coal mines, Kathautia mines commenced operations in February 2017 thus further improving coal security," Hindalco press report says.

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As far production results are concerned, alumina production including the production at Utkal Alumina stands at 7,44,000 tons for Q3 2017, which registers 5% increase YOY. Aluminium metal production stood at 3,20,000 tons and was up 9%.

Hindalco delivered robust operational performance in a challenging demand scenario and economic environment. Increasing dependency on cheaper imports continue to impact domestic sales volumes. Hindalco remains focussed on operational excellence, higher value addition, customer centricity and cash conservation throughout the quarter to maintain stability.

Sanjiv Bhasin of IIFL also said that he remains overweight on Hindalco. "It has been one of of our top performing stocks, and we continue to think it to be a market outperformer," he said.

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