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Hindalco Industries
Largely in-Line F1Q12 Result
Quick Comment – F1Q12 highlights: PAT was
Rs6.44bn (up 21% YoY but down 9%QoQ) and EBITDA
was Rs8.15bn (up 2% YoY but down 2% QoQ). PAT
was 1.6% above MSe due to higher-tha- expected other
income and lower tax rate.
Copper business: 1) Copper output of 73Kt (down 4%
YoY and 14% QoQ) was 13% below Mse primarily due
to a longer-than-anticipated bi-annual shutdown of 45
days vs. a planned shutdown of 35 days at Dahej. 2)
EBIT of Rs1.45bn was up 17% YoY but down 29% QoQ.
Copper EBIT margin stood at 3.7%, down 7bp YoY and
75bp QoQ. Higher Tc/Rc and byproduct revenue were
offset by higher energy costs and lower output.
Aluminum business: 1) Aluminum production of 140kt
was almost flat YoY and QoQ. Higher production from
the new pots at Hirakud is expected from F2Q12.
2) Aluminum EBIT of Rs5.9Bb was up 8% YoY and 7%
QoQ. Coal price increase drove EBIT margin for
aluminum business to 28.6%, down 96bp YoY and up
319bp QoQ. 3) Production of extruded products was
affected as operations in Kerala continued to be
hampered following the lock-out declared in Feb-11.
Other highlights: 1) Other income was higher by 126%
YoY and 20% QoQ, driven by higher treasury yields,
enhanced corpus, and consequent return of capital from
Novelis. 2) Tax rate was 19.8% vs. 18.1% for F2011.
Project updates:1) Hirakud smelter expansion from
161Kt to 213KT along with a 100MW CPP is expected to
be completed by early 2012. 2) The MoEF has
recommended that the Mahan Coal block be rejected
and the matter has been referred to the GoM (Group of
Ministers). We believe this to be a negative for the
Mahan smelters’ profitability and hence for Hindalco. In
the interim period, Hindalco has made an application for
a tapering linkage and is also exploring open market
purchases and imports to meet the shortfall. 3) The
359kt Mahan Aluminum smelter along with a 900MW
CPP is on track and is to commence production by the end of
2011. 4) The progress on the Utkal refinery is largely on track
and the unit is expected to be commissioned in the F2H12.
Despite cost overruns, the company expects the operating cost
of this project to be in the lowest quartile of the global cost
curve and to be value accretive. 5) Stage II forest clearance for
the Aditya smelter and power plant has been received and is
expected to start by early 2013.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Hindalco Industries
Largely in-Line F1Q12 Result
Quick Comment – F1Q12 highlights: PAT was
Rs6.44bn (up 21% YoY but down 9%QoQ) and EBITDA
was Rs8.15bn (up 2% YoY but down 2% QoQ). PAT
was 1.6% above MSe due to higher-tha- expected other
income and lower tax rate.
Copper business: 1) Copper output of 73Kt (down 4%
YoY and 14% QoQ) was 13% below Mse primarily due
to a longer-than-anticipated bi-annual shutdown of 45
days vs. a planned shutdown of 35 days at Dahej. 2)
EBIT of Rs1.45bn was up 17% YoY but down 29% QoQ.
Copper EBIT margin stood at 3.7%, down 7bp YoY and
75bp QoQ. Higher Tc/Rc and byproduct revenue were
offset by higher energy costs and lower output.
Aluminum business: 1) Aluminum production of 140kt
was almost flat YoY and QoQ. Higher production from
the new pots at Hirakud is expected from F2Q12.
2) Aluminum EBIT of Rs5.9Bb was up 8% YoY and 7%
QoQ. Coal price increase drove EBIT margin for
aluminum business to 28.6%, down 96bp YoY and up
319bp QoQ. 3) Production of extruded products was
affected as operations in Kerala continued to be
hampered following the lock-out declared in Feb-11.
Other highlights: 1) Other income was higher by 126%
YoY and 20% QoQ, driven by higher treasury yields,
enhanced corpus, and consequent return of capital from
Novelis. 2) Tax rate was 19.8% vs. 18.1% for F2011.
Project updates:1) Hirakud smelter expansion from
161Kt to 213KT along with a 100MW CPP is expected to
be completed by early 2012. 2) The MoEF has
recommended that the Mahan Coal block be rejected
and the matter has been referred to the GoM (Group of
Ministers). We believe this to be a negative for the
Mahan smelters’ profitability and hence for Hindalco. In
the interim period, Hindalco has made an application for
a tapering linkage and is also exploring open market
purchases and imports to meet the shortfall. 3) The
359kt Mahan Aluminum smelter along with a 900MW
CPP is on track and is to commence production by the end of
2011. 4) The progress on the Utkal refinery is largely on track
and the unit is expected to be commissioned in the F2H12.
Despite cost overruns, the company expects the operating cost
of this project to be in the lowest quartile of the global cost
curve and to be value accretive. 5) Stage II forest clearance for
the Aditya smelter and power plant has been received and is
expected to start by early 2013.
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