- 08 Aug 2024
- ICICI Securities
NOVELIS REPORTS STEADY PERFORMANCE IN Q1FY25
HINDALCO - 592 Change: 0.65 (0.11 %)News: At Novelis (US based wholly owned subsidiary of Hindalco), Total operating income for the quarter came in at $4.2 billion up 2% YoY & flat QoQ with shipments of flat rolled product at 951 kilotonnes (kt), up 8% YoY & flat QoQ. Adjusted EBITDA for the quarter came in at $500 million with corresponding EBITDA margins at 12% (up ~170 bps YoY). EBITDA/tonne for Q1FY25 came in at $525/tonne up by 10% YoY, down 3% QoQ). Net Income for the quarter stood at US$151 million down 3% YoY.
Views: EBITDA per tonne declined QoQ due to less favourable product mix and higher costs (albeit in line with our estimates). However, the company expects the EBITDA/tonne to improve and gradually align with the medium-term guidance range of $600/tonne, driven by favourable market dynamics combined with capacity expansion & rise in recycling content. This bodes well for Hindalco considering Novelis contributed ~60% Hindalco’s consolidated sales and EBITDA. We maintain a positive stance on the stock supported by healthy demand for Aluminium metal due to its growing applications in the automobile and renewable sectors, strategic capacity expansion at Novelis and Hindalco and controlled leverage on B/S with Debt to Equity at ~0.5x.
Impact: Neutral