Hindalco Q2 results: Net up 78%, plans $4-5 bn capex for upstream units

Co raises earlier capex plans for upstream by $2 billion

Copper and aluminium maker Hindalco Industries reported a 78 per cent jump in its consolidated net profit (attributable to the owners of the company) in the quarter ended September 2024 (Q2FY25), aided by one-time income from a land sale and better operational performance.

 

In a media call on Monday, company executives announced plans to invest $4-5 billion in upstream facilities for copper and aluminium in the next two to three years. The company has hiked the capex plans by close to $2 billion, the executives noted.

 

For the quarter under review, Hindalco reported a net profit of Rs 3,909 crore, up 78 per cent from a year ago. Revenue for the metal maker in the same period was up 7.4 per cent to Rs 58,203 crore. Hindalco’s profit was helped by a boost in other income, which more than doubled to Rs 1,075 crore due to sale of a land parcel.

 

 

Consolidated Ebitda (earnings before interest, taxes, depreciation, and amortization), the company said, was up 49 per cent to Rs 9,100 crore, of which India business Ebitda was at Rs 5,139 crore, double from a year ago.

 

In a Bloomberg poll, 12 analysts estimated a revenue of Rs 54,984 crore, and 11 analysts estimated net income adjusted of Rs 3,254 crore. Hindalco outdid street estimates. 

 

Elaborating on the company’s capex plans, Satish Pai, managing director (MD) for the company, said Hindalco will be investing $4-5 billion to increase its upstream capacities across the two metals.

 

These expansions include 180 thousand tonne (Kt) in aluminium upstream capacity, alumina refinery with 850 Kt capacity, copper smelting capacity of 280-300 Kt, and a copper scrap recycling plant. Pai noted these investments will be funded through a mix of internal accruals and debt ranging up to Rs 7,000 to Rs 8,000 crore. This is in addition to the Rs 6,000 crore Hindalco had earlier stated as capex for downstream capacities, and the ongoing $4.1 billion capex at its Bay Minette project in the US.

 

On its now-shelved plans for a public listing in the US for Novelis, Pai said the same will be considered at a later time when the markets are favourable for a premium valuation. He added that once the Bay Minette project reaches advanced completion, which is onwards of Q2FY26, Novelis IPO plans may be on a stronger footing.

 

That said, the top executive cautioned that Novelis is likely to see a couple of tough quarters going ahead due to Chinese demand-led prices pressures on scrap, a key raw material. Commenting on the newly elected government in the US, where Novelis operates, Pai said: “The new administration is good for the company as Novelis makes metal in the US for the US market.”

 

The company in its results statement also said it has decided to not continue with its earlier stated plans to invest $375 million in Zhenjiang City, Jiangsu Province, China, due to higher capital expenditures, longer lead time, project execution risks, and uncertainties from external environment.