- 12 Nov 2024
- ICICI Securities
HEALTHY PERFORMANCE FROM INDIAN OPERATION HAS BALANCED OUT THE MUTED SHOW FROM NOVELIS
News: Total operating income for the quarter came in at ₹58,203 crore (up 7% YoY, 2% QoQ) with Novelis sales volume up 1.3% YoY at 945 kt. India aluminium downstream volumes were healthy at 103 kt (up 9.6% YoY), while upstream volumes reported a decline of 2% YoY to 328 kt. However, India coper segment declined by 13% at 117 kt. Reported consolidated EBITDA for the quarter stood at ₹8,029 crore (up 42% YoY) with corresponding EBITDA margins at 13.8%, up 340 bps YoY. EBITDA/tonne for Novelis was at $489/tonne (down 6% YoY), while aluminium upstream and downstream were at $1,349/tonne (up 80% YoY) and $179/tonne (down 11% YoY). EBITDA/tonne for copper was at $829/tonne (up 43% YoY). PAT in Q2FY25 stood at ₹3,909 crore, up 78% YoY & 27% QoQ.
Views: EBITDA improvement during the quarter can be largely attributed to better average realisation, and lower input cost and other expenses. Moreover, the company achieved its highest-ever EBITDA/tonne in the copper segment. Looking ahead, the company is on tracks to complete the Bay Minette project by FY26 and expects to commission the Aditya FRP expansion by FY26, which will increase aluminium downstream capacity from 430k tons to 600k tons. Also, its on-track of commissioning inner grooved tubes with 25k tons by Jan’25. These expansions are anticipated to enhance the company’s margins in the coming year. We remain optimistic about the stock, supported by strong demand for Aluminium and copper metal due to its incremental application in automobile and renewable spaces, strategic capacity expansion at Novelis and Hindalco and controlled leverage on B/S with Debt to Equity at ~0.5.
Impact: Positive