Hindalco Q3 net jumps 71% as aluminium, copper biz shine

New Delhi: Hindalco Industries, the flagship company of the Aditya Birla group, on Tuesday reported a 71% year-on-year jump in its consolidated net profit to ₹2,331 crore for the quarter ended December driven by a robust performance of its aluminium and copper businesses.

The copper business registered an Ebitda growth of 20% on the back of strong volumes and robust operations, said Satish Pai, managing director of Hindalco Industries Ltd. Ebitda is earnings before interest, tax, depreciation, and amortization.

The aluminium upstream business Ebitda rose 54%, supported by stable operations and lower raw material costs, he added. 

"We continue investing in promising growth areas in aluminium and copper downstream. Our overseas business and global recycling leader Novelis showed a 33% YoY improvement in Ebitda and Ebitda per tonne, driven by favorable metal benefits from recycling, higher pricing, and lower operating costs,” said Pai.

The company's consolidated revenue from operations for the quarter in consideration though declined 1% year-on-year to ₹52,808 crore in Q3FY24. 

“Revenue is driven by the amount of aluminium we sold, which was flattish because we were flat on everything that we can produce and we produce, and the LME was also low," the MD said. 

"But we continue to stay on our growth track despite challenging market conditions, delivering a strong performance, driven by an enhanced product mix and lower input costs across our businesses,” Pai said.

The company's consolidated Ebitda stood at ₹6,322 crore, a 61% rise, with an operating margin of 11%. 

Hindalco said it was able to reduce its cost of production as the price of raw material like coal continued to ease in the third quarter.

“Robust cash generation in India operations enables further deleveraging of our India business; Hindalco has pre-paid long-term loans of ₹4,370 crores during the year amid a high-interest rate scenario,” Pai noted.

The company has ₹11,000 crore in cash owing to the Indian business. “The company has a positive cash level of ₹3,000 crore (after debt). It will also maintain its net debt to Ebitda guidance for Novelis between 2.5 to 3 (2.65 after December 2023),” Pai said.

Revenue at Hindalco’s overseas subsidiary Novelis fell 5.58% to ₹32,749 crore in the quarter ended December 2023. It reported a rise of 33% yoy in the Ebitda to ₹3,783 crore due to favorable metal benefits from recycling, higher pricing, and lower operating costs.

Earlier, the company had said the cost of the greenfield rolling and recycling plant in Bay Minette, Alabama will be increased from $2.7 billion to $4.1 billion and will be commissioned in the second half of FY27. 

“We had to elevate our planned budget for this largely because of civil earthworks electricals because of the site that we have chosen. Once we did the detailed engineering, the budget went up to what we declared as $4.1 billion. We have moved the site from Huntsville, Alabama to Bay Minette for various environmental reasons,” added Pai.

The project will be financed through internal accruals and bridge loans over a year or so, as the company expects to generate a lot of cash going ahead. 

“So, over the next three years, we are expecting we will be generating a lot of cash, and may have to do a little bit of temporary bridge loans for a year or so. But I think that we will plan it out. So that is because again, the strength of our balance sheet, our loan debt to Ebitda, so handling, one year or two years, maybe a little higher capex will not impact,” he added.