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Q2FY12 – Performance driven by rise in LME price of Aluminium & Copper.
• Hindalco’s total income grew by 7% to `62.72 bn in Q2FY12 as against `58.59 bn in Q2FY11,
driven by increase in LME prices of Copper and Aluminium coupled with increase in volume
of Aluminium.
• EBIT for Q2FY12 fell by 5.9% Y-o-Y to `4.95. This was on account of sharp increase in Power
& fuel expense, raw material costs and other expenditure, which rose by 31.1%, 5.9% and
5.6% respectively. As a result of this EBIT margin declined by 108 bps to 7.9% for Q2FY12.
• Earnings before tax for Q2FY12 on Y-o-Y basis fell by 9.7% to `4.27 bn, driven by increase in
Interest expense & depreciation expense, which rose by 28.3% to `675 mn and 1.4% to
`1741 mn respectively for the same period.
• PAT for Q2FY12 on Y-o-Y was up by 16% to `5.02 bn mainly driven by increase in other
income which rose by 114% to `1761 mn.
Result Highlights
• Topline growth driven by increase in LME prices of Copper & Aluminium coupled with
increase in volume of Aluminium. Hindalco’s total income grew by 7% to `62.72 bn in
Q2FY12 as against `58.59 bn in Q2FY11. This was on account of increase in LME prices of
Copper (23.7% Y-o-Y) and Aluminium (15.3% Y-o-Y) coupled with increase in Aluminium
volume. Aluminium Metal production for Q2FY12 was up by 16.2% on account of low base
effect, as metal production during same period previous year was impacted due to outage
at Hirakud smelter.
• More than proportionate increase in cost for Aluminium had put pressure on margins for
Q2FY12: EBIT margin declined by 108 bps to 7.9% for Q2FY12, mainly driven by sharp
increase in input cost for Aluminium division which rose by 20% Y-o-Y, dragging the EBIT
margins for the same by 281 bps. However cost of production for copper division was up by
only 2.7% as result the margins for the same for Q2FY12 was up by 37 bps to 3.6%.
• LME prices of Copper and Aluminium continue to decline on global concerns: On the
contrary to sharp Y-o-Y rise in LME Copper & LME Aluminium prices for Q2FY12, currently
the prices are on the downward trend owing to global uncertainty. However the input costs
continue to rise, we expect this would put pressure on the margins going forward.
Valuation & Viewpoint
The Stock has fallen by 42% over last one year; however given global uncertainty, upward shift in
input costs, falling Aluminium prices (LME), we remain cautious on the stock and wait for
indication for positive triggers like reversal of LME prices or ease of global uncertainties.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Q2FY12 – Performance driven by rise in LME price of Aluminium & Copper.
• Hindalco’s total income grew by 7% to `62.72 bn in Q2FY12 as against `58.59 bn in Q2FY11,
driven by increase in LME prices of Copper and Aluminium coupled with increase in volume
of Aluminium.
• EBIT for Q2FY12 fell by 5.9% Y-o-Y to `4.95. This was on account of sharp increase in Power
& fuel expense, raw material costs and other expenditure, which rose by 31.1%, 5.9% and
5.6% respectively. As a result of this EBIT margin declined by 108 bps to 7.9% for Q2FY12.
• Earnings before tax for Q2FY12 on Y-o-Y basis fell by 9.7% to `4.27 bn, driven by increase in
Interest expense & depreciation expense, which rose by 28.3% to `675 mn and 1.4% to
`1741 mn respectively for the same period.
• PAT for Q2FY12 on Y-o-Y was up by 16% to `5.02 bn mainly driven by increase in other
income which rose by 114% to `1761 mn.
Result Highlights
• Topline growth driven by increase in LME prices of Copper & Aluminium coupled with
increase in volume of Aluminium. Hindalco’s total income grew by 7% to `62.72 bn in
Q2FY12 as against `58.59 bn in Q2FY11. This was on account of increase in LME prices of
Copper (23.7% Y-o-Y) and Aluminium (15.3% Y-o-Y) coupled with increase in Aluminium
volume. Aluminium Metal production for Q2FY12 was up by 16.2% on account of low base
effect, as metal production during same period previous year was impacted due to outage
at Hirakud smelter.
• More than proportionate increase in cost for Aluminium had put pressure on margins for
Q2FY12: EBIT margin declined by 108 bps to 7.9% for Q2FY12, mainly driven by sharp
increase in input cost for Aluminium division which rose by 20% Y-o-Y, dragging the EBIT
margins for the same by 281 bps. However cost of production for copper division was up by
only 2.7% as result the margins for the same for Q2FY12 was up by 37 bps to 3.6%.
• LME prices of Copper and Aluminium continue to decline on global concerns: On the
contrary to sharp Y-o-Y rise in LME Copper & LME Aluminium prices for Q2FY12, currently
the prices are on the downward trend owing to global uncertainty. However the input costs
continue to rise, we expect this would put pressure on the margins going forward.
Valuation & Viewpoint
The Stock has fallen by 42% over last one year; however given global uncertainty, upward shift in
input costs, falling Aluminium prices (LME), we remain cautious on the stock and wait for
indication for positive triggers like reversal of LME prices or ease of global uncertainties.
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