Hindalco's standalone EBITDA disappoints during the quarter
- Indian operations post weak EBITDA, led by production issues: Standalone EBITDA at Rs4.6bn was ~43% below estimates, led by production issues in both copper and aluminium segments. Copper smelters were shut for nearly 34 days resulting in production of only 69kt (down 37% q-o-q) whereas aluminium suffered power outages, leading to a 9% q-o-q fall in output to 131kt. Other expenses shot up 37% q-o-q partly due to higher repair costs of Rs400mn-450mn and increased freight of Rs150mn. While the q-o-q copper and aluminium production are expected to go up by 15kt-20kt and 10kt respectively in Q2FY13, it is likely to normalize fully in the coming 1-2 quarters.
- Novelis’ EBITDA beats estimates; guides for further improvement: Novelis reported an adjusted EBITDA of $259mn, ~11% ahead of the estimate of $234mn with total volumes of 748kt (estimate: 738kt) and EBITDA/t of $346 (estimate: $317). Both volume and EBITDA/t have been improving over the last two quarters and are up ~10% each from the bottom reached in Q3FY12. With the guidance for a further improvement, Novelis expects FY13 EBITDA to be flat y-o-y at $1.05bn (estimate: $959mn).
Outlook and valuations: Factoring lower production and high costs in the standalone entity (no change in Novelis estimates), Edelweiss lowers the consolidated EBITDA estimates by 4.5%/3.5% for FY13/FY14 respectively. Accordingly the target price gets revised down to Rs139 (Rs147earlier). On revised estimates, the stock currently trades at 7.4xFY14E. Maintain buy
Click here to read the full report
Edelweiss is one of the leading financial services company based in Mumbai, India. Its current businesses include investment banking, securities broking and investment management. They provide a wide range of services to corporations, institutional investors and high net-worth individuals.
For more information please write in to email@example.com
Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor IndiaNotes.com accept any liability whatsoever arising from the use of any of the above contents.
- Hindalco: Topline to grow at a CAGR of 15.7%, buy
- Hindalco Industries Q2FY15 results come in below estimates
- Hindalco Ind Q2FY15: Outperformance in top line, buy
- Technical Calls: Adani Ent, Hindalco, IDBI
- Q2FY15 Preview: Hindalco Industries sales to increase 4% QoQ
Have a question?
Also On IndiaNotes.Com
- Plan and indulge this festive season with your credit card
- Fixed rate home loans, are they in vogue again?