Hindalco's profit after tax expected to decline by 33%

Hindalco's net sales for the March quarter 2014 is expected at around Rs 7,400 crore as against Rs 6,994 last year, up 6%. However, its net profit is expected at Rs 320 crore, down 33% from its previous March quarter profit due to lower aluminium demand. Operating margins are seen at 7.5% versus 9% in the previous March quarter. Anything higher than this could be positive for the company's stock.

Its 100% subsidiary, US based Novelis has already announced its results, which were in line with the expectations. However, the highlight of the result was that the company returned capital of US$ 250 million to the parent. Although the money will remain in the company, it highlights the improvement in the cashflows of Novelis, which was a concern for the investors.

Since, the Novelis results were in line, Hindalco's results are should also be inline. Novelis is two third of the company's revenues over half of the company's profits. However, the management commentary on the outlook will be crucial. Aluminium prices have shot up from US$1720 per tonne to US$ 1800 per tonne, if the trend sustains, it could be a huge positive for the company.