Moneycontrol PRO

Novelis reports a weak quarter: What does this mean for Hindalco?

Novelis' net sales decreased 3 percent to $4.2 billion for the third quarter, compared to $4.3 billion in the year-ago period, driven by lower average aluminum prices

February 07, 2023 / 09:47 AM IST
Hindalco Industries

Hindalco Industries

  • bselive
  • nselive
Todays L/H

Novelis, a wholly owned subsidiary of Hindalco, reported a net profit of $12 million for the December quarter, down 95 percent on-year. Its adjusted EBITDA (earnings before interest, taxes, depreciation and amortisation) came in at $341 million, down 33 percent over the last year.

Net sales of the company decreased 3 percent to $4.2 billion for the third quarter, compared to $4.3 billion a year back, driven by lower average aluminum prices and a 2 percent decrease in total flat-rolled product shipments, said the company.

At 9:30am, Hindalco was quoting at Rs 433 on the National Stock Exchange, lower by 3.2 percent. This level is below its 50-day and 100-day simple moving averages (SMA) but above its 200-SMA.

"Our results were pressured by continued unprecedented inflationary headwinds, but were also further impacted by lower shipments, resulting from significantly larger-than-anticipated customer inventory reduction actions in the beverage packaging market,” Steve Fisher, President and CEO of Novelis Inc, said.

Follow our live blog for all the market action

What do brokerages feel about Hindalco after the disappointing show?


It has a 'buy' rating on the stock with a target of Rs 600 per share.

“Volumes and EBITDA per tonne fell, dragged by higher costs and inventory destocking in beverage cans,” the firm noted.

These headwinds might continue for a few more quarters but the management believes Q3 was trough margin quarter. “Expect EBITDA per tonne to improve in Q4,” it said.


The brokerage house has a 'buy' rating on the stock with target price of Rs 580.

“New pricing clauses and softening costs should lead to a gradual recovery. We see profitability returning to steady state guidance only in the second half of FY24. Strong free cash flow generation and phased capex augur well for leverage,” it said.

Nuvama Wealth

The brokerage firm retains the 'buy' tag on the stock with the target price revised to Rs 506, from Rs 511 earlier.

“Near-term outlook is cautious and EBITDA per tonne could be $400-450 in the next two-three quarters,” it noted.

The firm has cut FY23/FY24 EBITDA for Hindalco by 4 percent/6 percent factoring in Novelis’ lower earnings.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.​​​​​​

Moneycontrol News
first published: Feb 7, 2023 09:47 am