Hindalco Q2 Preview: Profit set to soar over 50% on robust aluminium segment, Novelis performance expected to drag

Hindalco Industries, the metals flagship of the Aditya Birla Group, is poised to deliver a strong set of numbers for Q2FY25, driven by a stellar performance in the aluminum segment. However, its US subsidiary, Novelis, is expected to weigh on overall growth due to operational disruptions.

 Key expectations for Q2FY25

- Revenue: Analysts project consolidated revenue to rise 4.5 per cent year-on-year to approximately Rs 56,581 crore, compared to Rs 54,169 crore reported in the same quarter last year. The growth is attributed to higher aluminum shipments and improved metal premiums.
- EBITDA: Consolidated EBITDA is likely to increase 29 per cent to Rs 7,212 crore, up from Rs 5,612 crore in Q2FY24. The expansion is driven by stronger aluminium prices and lower input costs, especially due to easing coal prices in India.
- PAT: Net profit is expected to jump 54 per cent year-on-year to about Rs 3,381 crore, as compared to Rs 2,196 crore in the previous year, buoyed by higher margins and improved profitability in the domestic operations.

Strong aluminium performance offsets Novelis weakness

While the aluminium division is expected to outperform, Novelis' results are anticipated to be softer than expected. Novelis faced significant challenges, including production disruptions at its Sierre plant in Switzerland, which was impacted by severe flooding. This resulted in additional charges of $61 million, further exacerbated by restructuring and impairment expenses.

The aluminium segment benefited from higher average LME aluminum prices, which rose 10 percent year-on-year. Additionally, average alumina prices surged 51 per cent, supporting upstream profitability.

Standalone performance robust

Hindalco's standalone business is expected to shine, with revenue likely to grow 4 per cent to Rs 21,501 crore, compared to Rs 20,676 crore last year. Standalone EBITDA may witness a solid increase of 47 per cent, reaching Rs 2,574 crore, driven by improved operational efficiencies and lower power costs. Net profit for the standalone segment is forecasted to rise 51 per cent to Rs 1,281 crore.

Outlook: Favorable trends in aluminium, but copper remains steady

Analysts expect continued strength in the aluminium segment, supported by higher prices and easing raw material costs. However, the copper segment is expected to see flat sales volumes on a quarter-on-quarter basis, providing limited upside.

Current Market Price (CMP): Rs 649.30