Hindalco Industries Q4 2010 result

Friday, 14 May 2010
Hindalco Industries announced Q4 of FY10 net revenues at INR 54 billion, were below our expectation of INR 58.2 billion. EBITDA, at INR 8.35 billion was below estimates of INR 9.1 billion due to preponed shutdown of copper smelter for 38 days leading to 5 kilo tonne of lost production. However, net profit, at INR 6.6 billion was above our estimate of INR 5.5 billion due to higher than expected other income and tax write back of INR 1.1 billion.

1. Aluminium business: PBIT rises 40% QoQ;
PBIT of the aluminium business was INR 6.1 billion against INR 4.4 billion in Q3 2010. The 40% QoQ increase in PBIT was led by 8% QoQ rise in LME prices and stable costs.

2. Copper business: PBIT declines 20% QoQ
Copper business’ PBIT was at INR 1.3 billion. PBIT was down 20% QoQ as copper production declined 20% QoQ. During the quarter, the company posted net derivative loss of INR 290 million.

Mr Prasad Baji senior VP Research of Edelweiss Securities Limited said that “We are positive on Hindalco’s aluminium business owing to its high level of integration and portfolio of high margin alumina and aluminium projects, of which, 1.5 million tonne per annum and 0.7 million tonne per annum respectively are expected to come on stream in 2012. In spite of recent correction, we anticipate structurally higher aluminium prices going forward. Our forward estimates for copper business are in line with Q4 2010 actual. We are keeping our 2011 and 2012 profitability estimates unchanged.”