Why Hindalco Industries Share Price Tanked 13% After Novelis December Quarter Earnings?
by Sandip Das on 13 February 2024, 4 min read
On the morning of February 13, 2024, Hindalco Industries witnessed a sharp decline of over 13 percent in its share price, triggered by the release of December quarter earnings by its US-based subsidiary, Novelis. The Bay Minette project’s return guidance underwent a substantial revision, now indicating double-digit figures as opposed to the previous mid-teens.
Novelis reported a 65 percent increase in the total capital cost for the Bay Minette project, along with a one-year delay. It has adjusted the estimated project cost to $4.1 billion. It now expect to commission it by the end of Calendar Year 2026 or 2HFY27.
The aluminum rolling and recycling firm, based in Atlanta, disclosed a 23 percent QoQ decline in net profit, dropping from $174 million to $121 million. Revenue also experienced a downturn. It decreased by over 4 percent QoQ and 6 percent YoY, amounting to $3.94 billion in the reported quarter.
In Q3 FY24, Novelis posted an adjusted EBITDA of $454 million. Volumes remained steady year-over-year at 0.91 million tonnes, despite a -2.5 percent QoQ decline. This stability was attributed to weaknesses in specialties, counterbalanced by increased shipments in the auto and beverage can segments. The adjusted EBITDA per tonne stood at $499, influenced by lower sequential operating leverage due to seasonality and planned shutdowns.
Looking ahead to Q4 FY24, the management at Novelis anticipates margins of approximately $525 per tonne. This factors in normalized volumes and a rebound in demand within the key beverage can segment.
Disclaimer: The information provided in this blog post is for informational purposes only and should not be construed as investment or trading advice. The author is not a financial advisor and does not have any professional qualifications in this area. The author does not guarantee the accuracy or completeness of the information provided. Any action you take based on the information in this blog post is done at your own risk. Please consult with a financial advisor before making any investment decisions.
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