Moneycontrol
Last Updated : Nov 13, 2014 03:07 PM IST | Source: CNBC-TV18

Hindalco Q2 earnings: A mixed bag, say experts

In an interview to CNBC-TV18, Tarang Bhanushali of IIFL and Giriraj Daga of Nirmal Bang Institutional Equities spoke about the financial performance of the company in the quarter gone by and the road ahead.


Hindalco Industries' second quarter (July-September) net profit slipped 78 percent to Rs 78.7 crore on the back of exceptional loss of Rs 431.2 crore. The company had posted net profit at Rs 357.1 crore in the same quarter last year.


In an interview to CNBC-TV18, Tarang Bhanushali, AVP- Research of IIFL along with Giriraj Daga, Senior Research Analyst at Nirmal Bang Institutional Equities spoke about the financial performance of the company in the quarter gone by and the road ahead.


Below is the verbatim transcript of Tarang Bhanushali and Giriraj Daga's interview:

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Q: What are your initial thoughts?


Daga: If you look at the operational performance, we were estimating EBITDA of close to Rs 850 crore and it has come about to Rs 896 crore so that remains to be better and it appears that -- if one looks at the segment numbers, copper has driven the performance. On a sequential basis, numbers have gone by close to 30 percent on copper business. So that has driven the performance there. Aluminium was expected to do well because of the strong aluminium prices. So we already knew.


Q: Operationally the numbers look good?


Bhanushali: Yes, I believe it is a mixed bag on the aluminium front, the numbers are below our estimate but the company has managed to surprise us on the copper business front. There the EBIT is quite strong compared to our estimate. So the disappointment on aluminium has been offset by the strong performance in copper. I believe there is some inventory increase in the company that has led to lower aluminium EBIT during the quarter.


Q: What is your rating currently on Hindalco?


Bhanushali: Accumulate rating with a target price of Rs 155 on the stock.


Q: You believe that the operational performance was good, will you be revisiting your numbers or waiting for further clarity with regard to the coal auctions in particular?


Bhanushali: We would be waiting for the coal allocations and all, the e-auction and then we will take a call. Right now, we are maintaining our accumulate rating on the stock.


Q: What is your rating currently on the stock and post this operational beat if you like to call it, would you be changing anything or will you be waiting by for the auction of the coal mines?


Daga: We currently have sell rating on the stock because of the aluminium performance. We may revise our numbers and we might give some more comments post that.


Q: Is this copper business -- the kind of performance 7.9 percent on EBIT margins on copper sustainable?

Daga: To some extent because this is most likely to sustain for now.

First Published on Nov 13, 2014 02:39 pm
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