InvestorQ : How did you find the quarterly numbers of Hindalco for the Dec-20 quarter? Is the stock worth buying at these prices?
Mitali Bhutta made post

How did you find the quarterly numbers of Hindalco for the Dec-20 quarter? Is the stock worth buying at these prices?

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6 months ago
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It was a bumper quarter for Hindalco, both in terms of the top line and the bottom line. For the Dec-20 third quarter, Hindalco Industries reported profit growth of a whopping 90% at Rs.2,021 crore. This growth was achieved largely on the back of inventory efficiencies and robust revenues. For a company of the size of Hindalco, the dividends of inventory policy tweaks were immediately visible.

Total revenues for Hindalco for the quarter to Dec-20 were up by a robust 19.7% at Rs.34,958 crore. What was really gratifying for the investors was that this was largely triggered by a 17% growth in Novelis. The Novelis acquisition by Hindalco in 2007 had been an expensive buy at that time but it does look like the company is finally beginning to justify the efforts and the investment made in it.

For the Dec-20 quarter, shipments by Novelis of Canada touched a record level of 933KT or kilo tons. The Indian aluminium business was not too far behind. This side of the business also saw robust growth of 30% as aluminium demand picked up across the board, more so with a sharp revival in industrial output back to near pre-COVID levels.

Novelis is not only a major contribution to growth but also to EBITDA. Nearly 80% of the EBITDA contribution of Hindalco came from Novelis as well as the India aluminium business. The resultant OPM expanded from 7.11% to 10.14% in Dec-20 quarter on a yoy basis. If the results of discontinued operations are excluded, the PAT margins grew from 3.64% in Dec-19 quarter to 5.78% in Dec-20 quarter; a huge and decisive leap.

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