About the Company:
Being a most populist metal stock, Hindalco Industries has been the most Star Trading House status in India. Hindalco Industries is a flagship company of Aditya Birla Group. It is the industry leader in aluminium and copper, established in 1958, headquartered in Mumbai, India. Its aluminium is registered under the High-Grade Aluminium Contract on the London Metal Exchange (LME), while copper is also available in LME with Grade-A certification.
QoQ & YoY Performance:
India’s Aluminum and Copper manufacturing Company has declared the results for the third quarter of the fiscal year ending March 2020.
- QoQ Performance: Consolidated Net sales/ revenue of the company recorded to Rs. 29,197 crores, slipped by 1.55% in the December quarter of FY20. Total expenditure (excluding interest and depreciation expenses) is Rs. 28,009 crores, slipped by 0.74%. EBITDA numbers down by 6.56%.
- YoY Performance: The Company has reported declined in sales/revenue growth by 12.09% while expenditure (excluding interest and depreciation expenses) of the company decreased by 2.65%. EBITDA numbers slipped by 10.29%.
- Profitability of the company: The Company posted PAT at Rs. 1,062 crores, surged by 9.03% QoQ and 23.82% fell on a yearly basis.
Copper Highlights plus – Q3 FY20
- Domestic Copper market growth in Q3 FY20 moderated to 2% YoY
- Metal Sales volume at 84 Kt lower by 14% YoY, on account of operational issues
- VAP Sales (CC Rods) at 58 kt, up 3% ; share of VAP sales at 69% of total volumes
- EBITDA at Rs. 256 crore (vs. Rs. 490 crore in Q3 FY19) lower by 48% on account of lower volume and realization
- Benchmark Tc/Rc for CY20 is settled at 15.9 cents/lb, lower by 23% from CY19.
Aluminium Highlights plus – Q3 FY20
- Domestic market for Aluminium has contracted by (-)14% YoY ; (-)5% in 9M
- Global Aluminium prices dropped by ~11%, YoY to $ 1,754/ton
- Aluminium metal sales at 328 Kt up 2% YoY
- Aluminium VAP (excluding wire rods) sales was flat YoY at 75 Kt
- EBITDA at Rs. 1,036 crore (vs. Rs. 1,252 crore in Q3 FY19), due to lower realization, partially offset by lower input
- EBITDA margin at a healthy 19% in Q3 FY20, despite challenging macroeconomic environment
As per Lokesh Sethia, SEBI Registered Research Analyst, the stock is trading at Rs. 193 per share, the company’s combined financial performance reflecting strength in their income statement. However, MD of the company added, “For the past few years, Hindalco has continuously focused on improving plant operations. These efficiencies have helped us stay strong and steady amid weak markets.” Hence, we recommend it to “BUY’’ for the target Rs. 250 per share for short-medium term horizon.
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