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Hindalco Industries: Reports robust performance in Q1FY25

ICICIdirect Research 16 Aug 2024 DISCLAIMER

On consolidated basis, Total operating income for the quarter came in at ₹57,013 crore (up 8% YoY, 2% QoQ) with Novelis sales volume up 8% YoY at 951 kt. India aluminium downstream volumes were healthy at 96 kt (up 19% YoY). However, India upstream volumes reported a decline of 4% YoY to 329 kt. India coper segment came in broadly flat YoY at 119 kt.
Reported consolidated EBITDA for the quarter stood at ₹7,585 crore (up 32% YoY) with corresponding EBITDA margins at 13.3%, up 250 bps YoY and 110 bps QoQ. EBITDA/tonne for Novelis was at $526/tonne (up 10% YoY), while aluminium upstream and downstream were at $1273/tonne (up 84% YoY) and $138/tonne (down 31% YoY) respectively.
EBITDA/tonne for copper was at $811/tonne (up 48% YoY).
EBITDA improvement is largely attributed to lower input cost and better average realisation.
As per management, the overall cost of production is expected to remain stable in Q2FY25, which will continue to support EBITDA margins going forward. The company is on track with its capex plans and aims to complete Indian aluminium downstream capacity expansion to 600kt by FY26, which will further enhance the EBITDA going forward.
We maintain a positive outlook on the stock, driven by strong demand for Aluminium and copper metal due to its incremental application in automobile and renewable spaces, strategic capacity expansion at Novelis and Hindalco and controlled leverage with Debt to Equity at ~0.5x.
We have a BUY rating on the stock, valuing it at ₹825 i.e. 7.5x EV/EBITDA on FY26E.

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