Hindalco’s Profit Expected to Soar 62% Amid Strong Market Performance
The third quarter earnings season is in full swing, with around 460 companies set to release their Q3 financial results on Thursday. Among them, Hindalco and SJVN stand out as key companies to watch. Investors and analysts alike are eagerly anticipating their numbers, which could provide insights into the broader market trends.
Apart from Hindalco and SJVN, several other companies, including Aayush Wellness, ABC India, Abhishek Infraventures, Accel, Apex Capital, ACI Infocom, Acrow India, Addi Industries, BN Holdings, DCW Ltd, Infronics Systems, and KNR Constructions, are also set to declare their quarterly earnings.
Hindalco Q3 Expectations: Strong Growth Despite Challenges
Hindalco is expected to report robust growth in both profitability and revenue for the October-December 2024 quarter, driven by a strong India performance. However, the company’s overseas operations, particularly Novelis, have faced some challenges that might impact overall performance.
Revenue and Profit Forecast
According to analysts, Hindalco’s profit for Q3FY25 is projected to surge 62% year-on-year (YoY). Revenue is also expected to rise 11% YoY, primarily due to higher aluminium and alumina prices. The company has benefited from an increase in demand and favorable pricing trends in the metals market.
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is likely to improve by 28% YoY, mainly due to:
- Higher metal prices
- Lower power costs in India
- Increased efficiency in domestic operations
However, on a quarter-on-quarter (QoQ) basis, Hindalco might experience a decline in EBITDA and margins due to lower scrap spreads affecting Novelis’ performance.
Segment-wise Performance
Aluminium and Utkal Alumina Division
- EBITDA for aluminium, including Utkal Alumina, is projected to increase by 24% QoQ to ₹4,790 crore.
- Growth is driven by higher aluminium and alumina prices and slightly improved production volumes.
Copper Business
- Copper EBITDA is expected to fall to ₹650 crore, reflecting some pressure in the segment.
Novelis Performance
- Novelis’ adjusted EBITDA per ton is projected to drop 16% QoQ to ₹410.
- This decline is attributed to lower scrap spreads and tight scrap availability.
- Novelis had also faced operational disruptions due to flooding at its Switzerland plant, but operations have now resumed.
Brokerage and Analyst Insights
Kotak Equities estimates Hindalco’s India EBITDA (including Utkal) at ₹5,070 crore, with:
- Aluminium EBITDA (including Utkal) at ₹4,310 crore, primarily due to higher prices.
- Copper EBITDA at ₹760 crore, benefiting from resilient TcRcs and high sequential base.
- Novelis EBITDA at $391 million, factoring in higher scrap costs and reduced margins.
Broader Market Implications
Hindalco’s strong performance is expected to boost investor sentiment, particularly in the metals and mining sector. With aluminium prices remaining elevated, the company is well-positioned for sustained growth.
Meanwhile, the overall earnings trend from the 460 companies reporting today will provide a clearer picture of India’s economic landscape, particularly in key industries such as construction, manufacturing, and finance.
Conclusion
As Hindalco and 460 other companies announce their Q3 results, investors will closely watch how rising commodity prices, operational efficiencies, and market conditions have influenced corporate performance. Hindalco’s strong domestic growth offsets some of the challenges at Novelis, setting the stage for continued profitability. The results from these companies will be key indicators for market trends in 2025.
