Hindalco Net Profit Down By 23% on YoY, Topline Increases by 5.8%

Hindalco, the flagship company of Aditya Birla Group has posted net profit of Rs 333.98 crore for the quarter ending December 2013 against sales of Rs 7273.09 crore in the same period. Although the net profit is down by 23% on yearly basis, it is above the street expectation of around Rs 320 crore. However sales of the company were up by 5.8% on yearly basis. 

Hindalco primarily operates in two segments namely Aluminium and Copper. Aluminium segment which formed 34% of total sales for the Q3FY14 grew by 11.6% on yearly basis and stood at Rs 2471 crore. Increase in the sales was driven by higher volumes as realisation dropped in the quarter. The day for the company was saved due to depreciation in the Indian rupee, which helped it to arrest the sharp downfall in realisation. While sales from copper segment, which formed 66% of total sales, increased by mere 3.3% and stood at Rs 4816 crore for the Q3FY14. 

EBITDA of the company increased by 8% on yearly basis and was Rs 629 crore for Q3FY14 while EBITDA margins was marginally up 18 basis points to 8.64% for Q3FY14. Company was able to maintain EBIDTA margins despite 22% rise in raw material cost (forms 73% of sales) due to decline in other expenses (forms 7% of revenue) by 10% on yearly basis.  
Despite rise in the EBITDA, net profit of the company declined by 23% due to higher tax. Tax for Q3FY14 was at Rs 135 crore compared to Rs 109 crore for the same period last year. 

In a press statement company said its Greenfield projects are doing well and Mahan Smelter produced 18 Kt of Aluminium metal and Utkal Alumina International produced 87 Kt of alumina during Q3FY14. 

Shares of Hindalco are trading at trailing twelve month PE of 11.7 times, which still looks expensive as going forward margins are likely to be under pressure as company has to source coal for its Mahan and Utkal facility from market. Therefore, we advise our readers to stay away from the counter as of now.