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Hindalco: Realisations drive profits

Oct 30, 2000

Hindalco Limited has posted a 9% rise in profits for the quarter ended 30th September 2000. The company, which is operating at capacity levels, has benefited almost entirely from a 15% growth in realisations. An improvement in product mix too has contributed to better profitability.

(Rs m) 2QFY00 2QFY01 Change
Net Sales 5,157 5,508 6.8%
Other Income 331 329 -0.6%
Expenditure 2,786 2,861 2.7%
Operating Profit (EBDIT) 2,371 2,647 11.6%
Operating Profit Margin (%) 46.0% 48.1%  
Interest 149 168 12.8%
Depreciation 335 354 5.7%
Profit before Tax 2,218 2,454 10.6%
Other Adjustments - -  
Tax 605 700 15.7%
Profit after Tax/(Loss) 1,613 1,754 8.7%
Net profit margin (%) 31.3% 31.8%  
No. of Shares (eoy) 74.5 74.5  
Diluted Earnings per share#* 86.6 94.2 8.7%
*(annualised)      

During the quarter, net sales outpaced the growth in expenses. This was largely due to better price realisation in both the domestic and export markets. Indeed, the company has made considerable in roads into the export markets, in view of the higher realisations.

The company’s interest expenditure has increased mainly on account of its ongoing expansion plans and the acquisition of a 74% stake in Indal for a consideration in excess of Rs 10 bn.

We have estimated a 8% growth in topline and 11% growth in bottomline for the full year. The slower growth in profits is largely due to the fact that we have not capitalised the interest pertaining to the capex.

At its current price of Rs 725, the stock trades at a P/e multiple of 7.7x on annualised 2QFY01 earnings.


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