Hindalco Q1 net up 12% at Rs 474 crore; to review new investments

MUMBAI: Hindalco Industries on Tuesday reported a 12% increase in quarterly net profit as a one-time gain offset lower sales. India's biggest aluminium producer posted a net profit of 474.09 crore for the April-June quarter, compared to a net profit of 424.77 crore a year earlier.

Sales fell 3% to Rs 5,766.69 crore. The company, however, benefitted from a 42% rise in non-operating income to Rs 427.94 crore which included a one-time gain of Rs 203 crore.

Hindalco didn't elaborate where the gain came from.

The company said it is "re-evaluating its investment strategy " with respect to its proposed Aditya Refinery and Jharkhand Aluminium Projects in view of the delays in getting various regulatory approvals and the current uncertain economic environment.

The focus of the company is now on ramping up of the new projects already on stream, the company said.

Hindalco is confident of riding through these challenges with its thrust on stabilising the projects, operational efficiencies and cost control.

"The sales were bound to fall because of declining prices of copper and aluminium," said Giriraj Daga, an analyst with Nirmal Bang International Securities. He added that the company would have benefitted from a weaker rupee.

Global prices of copper fell 6% in the April-June quarter while that of aluminium fell 3%. The rupee fell 8.5% against the dollar in April-June.

Daga said the company's sales will improve in the subsequent quarters due to growing stability in metal prices. But it would be impacted by depreciation costs from its new refineries at Utkal and Mahan.

Hindalco's earnings come a day after its unit Novelis reported an 85% plunge in its net profit due to pricing headwinds and lower demand for some of its products.

Hindalco spent Rs 2,993.48 crore on raw materials during the quarter, down 18% on year. Finance costs rose 83% to Rs 148.72 crore.

"The focus of the company is now on ramping up of the new projects already on stream," the company said in a statement. "Depressed LME in an otherwise inflationary scenario poses a significant challenge," the statement added.

However, the company is confident of riding through these challenges with its thrust on stabilising the projects, operational efficiencies and cost control.

The Hindalco share ended Tuesday after the earning announcement marginally lower by 2.45% to Rs 91.45 a share. The shares of Hindalco have lost 29% this year, compared to a 1.2% decline registered by the key S&P BSE Sensex.