Shares of Hindalco Industries Ltd rose more than 2% on the morning of August 4, a day after US subsidiary Novelis Inc reported better-than-expected profits for the June quarter.
The Atlanta-based aluminum recycling and rolling company reported a 20% drop in annual revenue to $4.1 billion. Despite the drop, revenue was still above analyst estimates of $3.7 billion, up 10%.
The better-than-expected performance was due to better product mixes, higher product prices, and increased automotive shipments.
These positive factors were partially offset by lower shipments of soft drink cans and lower prices on the London Metal Exchange (LME). The company’s adjusted EBITDA fell 25% year-on-year to $421 million, matching analyst forecasts of $410 million. However, EBITDA per ton (EBITDA/t) was at $479, $34 higher than the estimate of $445/t. Growth was mainly driven by higher prices and mixed improvement as well as exchange rate gains. Profits of the Aditya Brila Group company fell 41% year-on-year to $166 million, but were 11% higher than analysts’ estimates of $149 million. Management has instructed to increase volume starting in the second quarter of fiscal year 2024. “We believe Hindalco is thinking hard about its long-term opportunities and we remain confident in the company’s capabilities given its leadership position in the automotive and beverage cans markets.
“We have slightly increased Revenue/EBITDA/APAT in 2024 to 2%/2%/7% and EBITDA/APAT in 2025 by 1%/5%,” Motilal said.
The brokerage firm maintained its “buy” rating on the stock and raised its price target by 21% to Rs 454 per share.
As of 10:19 a.m., shares were trading at Rs 458.45 on the National Stock Exchange, up 1.14% from the previous close.
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