Hold Hindalco Industries: Ventura

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26 Aug, 2025 12:21

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Ventura`s research report on Hindalco Industries

“Hindalco Industries Ltd’s Q1FY15 profit fell by 31% due to high costs while net profit, excluding those of its units, fell to Rs 327.5 crore in Q1FY15 from Rs 474.1 crore YoY. Stand-alone revenue grew by 37% to Rs 7,996.1 crore in Q1FY15, from Rs 5,837.9 crore YoY, higher volume and realization in the aluminium business that saw a ramp up in production at the Mahan smelter, boosted revenue. Of the total revenue, the aluminium business contributed Rs 3,011 crore or 38%, while the revenue from the copper business was around 62%. The smelting operations at Aditya Aluminium, Odisha were affected because of a prolonged power outage in early July due to external grid failure and torrential rain. Raw materials cost for the quarter jumped 71.7% to Rs 5,139.5 crore while power and fuel cost rose by 41% to Rs 1,136.8 crore. Finance costs more than doubled, increasing by 127% to Rs.338 in Q1FY15 from Rs.149 crore YoY. The finance cost rose due to interest on project loan being charged to the revenue on progressive capitalization of greenfield projects. Aluminium production (excluding Utkal refinery) was at 290 Kt in Q1FY15 as against 348 Kt YoY and 318 Kt QoQ impacted due to constraints posed by bauxite availability. Copper production for the quarter increased to 96 Kt from 68 Kt YoY on account of planned shutdown in Q1FY14 and maintained at the same level as in Q4FY14.” “Hindalco is probably at the bottom of its cycle and in all probability it will perform much better going forward on the back of the improvement in the economy even though the share price has run ahead of its fundamentals. The trigger for greater demand in the local market could come from higher infrastructure spend and higher demand from electrical and housing sectors. The management expects its greenfield factories progressing towards realising their potential and the robust performance in copper business also to continue.  Currently, at the CMP of Rs 182, Hindalco is trading at 12.9x and 10.4x its estimated earnings for FY15E and FY16E, respectively, we believe the current valuation is slightly overstretched and recommend to HOLD the stock and ‘BUY ON DECLINES’,” says Ventura research report.    

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