Hindalco: Pressure on realisations - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Hindalco: Pressure on realisations

Aug 1, 2001

Hindalco Industries Limited has posted an 8% decline in net profit to Rs 1,611 m for the quarter ended June 30, 2001. Net sales declined by nearly 3% to Rs 5.5 bn during the quarter. Other income saw a marginal 6% jump during the period under consideration.

(Rs m)1QFY011QFY02Change
Net Sales5,6525,490-2.9%
Other Income3073266.2%
Expenditure2,9572,9700.4%
Operating Profit (EBDIT)2,6952,520-6.5%
Operating Profit Margin (%)47.7%45.9% 
Interest 161104-35.4%
Depreciation3533704.8%
Profit before Tax2,4882,372-4.7%
Tax730650-11.0%
Provisions and contigencies 111 
Profit after Tax/(Loss)1,7581,611-8.4%
Net profit margin (%)31.1%29.3% 
Diluted no. of Shares (eoy) (m)74.574.5 
Diluted Earnings per share*94.486.5 
*(annualised)   
Current P/e ratio 8.7 

The company has provided for Rs 111 m towards provision for deferred tax during the quarter. Even if we remove this provision, the net profit has still shown a decline of 2%. As per the AS-22, cumulative net deferred tax liability upto March, 2001 works out to Rs 2.7 bn. Hindalco is meeting the same out of revenue reserves. The company was saved from further decline in profits owing to lower interest and taxation burden.

The company's first quarter performance was under pressure largely on account of lower aluminium prices, which put realisations under pressure. Aluminium prices on LME have come down to the level of US$ 1,400 per tonne from about US$ 1,550 per tonne three months back. However, the company did well to maintain its net margins at similar levels as compared to the FY01 performance.

To overcome the current constraints Hindalco has announced a brownfield expansion plan at its Renukoot facility. It aims to increase smelter capacity by 100,000 tonnes per annum (TPA) and alumina refining capacity by 210,000 TPA. Aluminium being a power intensive industry the company has also planned to augment its power generating capacity to 796 mega watts (MW) for meeting the increased requirements. The expansion is anticipated to be completed by 2003-04.

At the current price of Rs 750, Hindalco trades at a P/e multiple of nearly 9 times its first quarter annualised earnings. One should keep in mind that the company's future realisations depend on the international aluminium prices. Considering the current grim scenario, the prices are unlikely to move up any time soon. Therefore, in the near term, the stock may remain under pressure. However, in the longer term, the company's inherent strengths relating to business focus and expansion plans would stand it in good stead.


Equitymaster requests your view! Post a comment on "Hindalco: Pressure on realisations". Click here!

  

More Views on News

HINDALCO Announces Quarterly Results (3QFY20); Net Profit Down 22.0% (Quarterly Result Update)

Feb 17, 2020 | Updated on Feb 17, 2020

For the quarter ended December 2019, HINDALCO has posted a net profit of Rs 2 bn (down 22.0% YoY). Sales on the other hand came in at Rs 102 bn (down 14.3% YoY). Read on for a complete analysis of HINDALCO's quarterly results.

HINDALCO Announces Quarterly Results (1QFY20); Net Profit Down 94.5% (Quarterly Result Update)

Aug 13, 2019 | Updated on Aug 13, 2019

For the quarter ended June 2019, HINDALCO has posted a net profit of Rs 226 m (down 94.5% YoY). Sales on the other hand came in at Rs 101 bn (down 5.1% YoY). Read on for a complete analysis of HINDALCO's quarterly results.

HINDALCO 2018-19 Annual Report Analysis (Annual Result Update)

Aug 7, 2019 | Updated on Aug 7, 2019

Here's an analysis of the annual report of HINDALCO for 2018-19. It includes a full income statement, balance sheet and cash flow analysis of HINDALCO. Also includes updates on the valuation of HINDALCO.

HINDALCO 2017-18 Annual Report Analysis (Annual Result Update)

Dec 21, 2018 | Updated on Dec 21, 2018

Here's an analysis of the annual report of HINDALCO for 2017-18. It includes a full income statement, balance sheet and cash flow analysis of HINDALCO. Also includes updates on the valuation of HINDALCO.

More Views on News

Most Popular

Why We Picked This Small-cap Stock for Our Hidden Treasure Subscribers (Profit Hunter)

Sep 17, 2020

This leading household brand will profit big time in a post covid world.

My Top Stock to Buy in this Market Selloff (Profit Hunter)

Sep 22, 2020

The recent correction offers a great opportunity to buy this high conviction smallcap stock.

What Do the Charts Say About Buying Smallcaps Now? (Fast Profits Daily)

Sep 18, 2020

Everyone seems to be excited about buying smallcaps now...but is it the right thing to do? What do the charts tell us? Find out in this video...

How Much Money Do You Need to Be a Professional Trader? (Fast Profits Daily)

Sep 17, 2020

In this video I'll answer a question I get asked often: How much capital do I really need to trade the markets for a living? Let's find out...

More

Covid-19 Proof
Multibagger Stocks

Covid19 Proof Multibaggers
Get this special report, authored by Equitymaster's top analysts now!
We will never sell or rent your email id.
Please read our Terms

HINDALCO SHARE PRICE


Sep 25, 2020 03:36 PM

TRACK HINDALCO

  • Track your investment in HINDALCO with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks

HINDALCO - RIO TINTO COMPARISON

COMPARE HINDALCO WITH

MARKET STATS