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  • 04 Aug 2022
  • ICICIdirect Research

HINDALCO SUBSIDIARY NOVELIS REPORTS HEALTHY OPERATIONAL PERFORMANCE FOR Q1FY23

HINDALCO - 670 Change: -0.70 (-0.10 %)

News: For Q1FY23, Novelis’s net sales increased 32% YoY to US$5.1 billion, primarily driven by higher average aluminium prices and local market premiums. For the quarter, adjusted EBITDA increased 1% YoY to a record US$ 561 million as compared to US$ 555 million in the prior year period which included a $47 million gain related to a favourable decision in a Brazilian tax litigation (EBITDA was up 10% YoY excluding the favourable decision in Brazilian tax litigation in prior year). The underlying increase in Adjusted EBITDA is primarily due to higher product pricing, including some higher cost pass-through to customers, favourable product mix on improved automotive and aerospace shipments, and lower metal costs due to improved recycling performance, partially offset by high cost inflation and unfavourable foreign exchange translation. For the quarter, the ensuing Net income from continuing operations increased 1% to US$ 307 million. Excluding special items in both years, Q1FY23 net income from continuing operations increased 18% YoY to US$307 million.

View: Hindalco’s wholly owned subsidiary Novelis, reported healthy operational performance for Q1FY23 wherein adjusted EBITDA/tonne stood at US$583/tonne notably higher than our estimate of US$ 500/tonne. However shipments for the quarter stood at 962 KT, marginally lower than our estimate of 985 KT. Shipments were lower than our estimate, mainly due to supply chain constraints. Aided by better than expected Adjusted EBITDA/tonne, Novelis Q1FY23 Adjusted EBITDA came in higher than our estimate. Novelis adjusted EBITDA for the quarter stood at US$ 561 million, as compared to our estimate of US$ 493 million. Novelis has also upward revised its FY23 EBITDA/tonne guidance to US$ 525/tonne from US$ 500/tonne earlier.

Impact: Positive.