Hindalco has declared its 4QFY2009 results. The standalone topline de-grew by 24% y-o-y to Rs3,809 crore.
This de-growth was mainly due to a steep fall in LME aluminium, alumina and copper prices y-o-y, during the quarter.
For FY2009, the standalone topline de-grew by 5.1% y-o-y to Rs18,219 crore (Rs19,201 crore).
On the operating front, Hindalco posted a significant decline in EBIDTA margins by 670bp y-o-y, to 9.2% from 15.9%, during 4QFY2009. The decline in the margins was mainly due to lower LME prices y-o-y and an increase in the costs. Hence, Net profit declined by a hefty 50% y-o-y to Rs268 crore (Rs536 crore), during the quarter.
However, on a consolidated basis, the company posted a substantial decline of 78% y-o-y in the Net profit, at Rs485 crore from Rs2,193 crore, in FY2008.
The Net profit has been impacted due to a loss of US $1.9 billion in Novelis, a subsidiary of Hindalco, in FY2009, which includes extraordinary losses of US $1.5 billion due to asset impairment, and a loss of US$556 million on account of unrealised mark-to-market losses on the hedging of commodities and currencies.
Excluding the impact of extraordinary items, on a pre-tax basis, Novelis has posted a loss of US$164mn in FY2009, as against the profit of US$47mn in FY2008.
On account of weak aluminium demand and prices, an over-stretched balance sheet and rich valuations, we maintain SELL on Hindalco.