Hindalco Q1 Preview: Novelis Guidance Signals a Good Outlook

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Hindalco Q1 Preview: Novelis Guidance Signals a Good Outlook
Credit: © Reuters.

By Aditya Raghunath

Investing.com -- Novelis Inc., the US subsidiary of Hindalco Industries Ltd. (NS: HALC ), announced its numbers for the June 2021 quarter, and it looks like its parent company has much to cheer about. Revenue grew 59% to $3.85 billion and EBITDA (earnings before interest, tax, depreciation and amortization) was up 101% to $508 million. Both figures are in comparison to June 2020 numbers.

In its research report, brokerage firm ICICI Direct said, “For Q1FY22E, we expect Hindalco's domestic operations (standalone operations + Utkal) to post aluminum sales volume of ~305000 tonnes (303000 in Q1FY21, 329000 in Q4FY21) and copper volumes of ~75000 tonnes (58000 tonnes in Q1Y21 and 107000 tonnes in Q4FY21).”

It expects Hindalco's domestic operations’ topline to come in at Rs 12,752 crore (up 71% YoY but down 12% QoQ). EBITDA margin is likely to come it at 15.1% (13% in Q4FY21, 12% in Q4FY21). Subsequent EBITDA of domestic operations is likely to come in at Rs 1,930 crore, up 116% YoY, 2% QoQ.

Hindalco shares closed at Rs 443.25 on August 5. Brokerage firm Motilal Oswal (NS: MOFS ) has a buy call on the stock with a target price of Rs 520. It said Hindalco is the preferred non-ferrous pick owing to robust volume recovery in both India and Novelis, profitability in its aluminium business and decent valuations.

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