Hindalco Q4 PAT seen up 26% at Rs 578 cr

Aditya Birla group's flagship company and world's largest aluminium rolling company Hindalco Industries is likely to post good growth in topline and EBITDA on quarter-on-quarter basis.

According to CNBC-TV18 estimates, company is expected report 13% degrowth in fourth quarter standalone profit after tax (PAT) of Rs 578 crore as against Rs 664 crore in a year ago period.

January-March quarter FY10 PAT of Rs 664 crore included tax adjustment amounting to Rs 113 crore. If we remove the same, the PAT would be Rs 551 crore.

Revenues are seen going up by 21% at Rs 6,507 crore from Rs 5,358 crore in same quarter the previous year. Earnings before interest, tax, depreciation and amortisation (EBITDA) is likely to go up by 10% at Rs 916 crore from Rs 835 crore. However, EBITDA margin is seen growing at 14% as against 16%.

On quarter-on-quarter basis, revenues are expected to grow by 10%, EBITDA by 24% and profit after tax by 26%. Even EBITDA margin is seen improving at 14% versus 12% in a year ago period.

Factors at play:
-Aluminum segment profitability to be boosted by increase in commodity prices -Auminium prices have averaged USD 2,510/t compared to USD 2,330 in 3QFY11 (8% jump) leading to segmental profit improvement.
-In aluminum realizations should increase and production should increase due to ramp back of production at Hirakud smelter (shut during 2Q due to heavy rains).
-Expect partial impact (1 month) of coal price hike to kick in 4Q, though this will be partially offset by lower costs due to normalization of Hirakud operations.
-Cost inflation has impacted this segment also, with margin dipping across the board YoY.
-Aluminum volumes are expected to increase 4-6% QoQ to 140k tons
-Copper volumes are expected to increase 7.5%-8.5% QoQ to 87k tons.
-Copper production was affected in 3QFY11 by a breakdown of cooling towers at its sulfuric acid plant.
-Due to robust performance in the copper segment, higher alumina realization and metal volumes.

(ABCIL), a 55% subsidiary of Hindalco, acquired the chloro chemicals division (CCD) of Kanoria Chemicals (KCIL)
-For a cash consideration of INR 8.3 billion
-CCD has current caustic soda capacity of 115 ktpa near Renukoot, Uttar Pradesh
-ABCIL has a capacity of 105 ktpa in Rehla, Jharkhand.
-CCD also has a captive power plant of 50 MW based on linkage coal.
-Transaction requires various approvals but is expected to be completed by May 2011.
-The acquired entity can meet the caustic soda requirements of Hindalco for its existing and partly for its greenfield alumina operations (Utkal).
-ABCIL currently meets 75-80% of Hindalco