Why is Hindalco down 7%, logging sharpest 1-day fall since June? Details

Hindalco Industries' shares saw a sharp fall on Thursday after Constellium, a peer of its subsidiary Novelis, reported disappointing September quarter numbers

Hindalco Industries shares slipped 7 per cent to Rs 666.80 on the BSE in Thursday’s intra-day trade on the back of heavy volumes on profit booking. The company's stock recorded its sharpest intra-day fall since June 2024, when it had fallen 14.6 per cent.

 

At 10:33 AM, Hindalco shares were trading 4 per cent higher at Rs 689.65, as compared to the 0.02 per cent decline in the BSE Sensex. The average trading volumes on the counter had jumped four-fold so far, while a combined 10.28 million equity shares of the company had changed hands on the NSE and BSE.

 

 

In one year, Hindalco share price has outperformed the market by surging nearly 50 per cent, as compared to the 25 per cent rally in the benchmark index. The stock had hit a record high of Rs 772 on October 3, 2024.

 

The sharp fall in the Aditya Birla Group company's stock today was seen after Constellium, a peer of its subsidiary Novelis, reported disappointing September quarter numbers.

 

In the third quarter of calendar year 2024 (Q3 2024), shipments by Constellium declined by 5 per cent from the last year to 352 thousand metric tons. The company's management said packaging demand remained healthy during the quarter.

 

However, it added that aerospace demand has started to slow down as commercial aerospace OEMs are dealing with supply chain challenges and continue to struggle to increase build rates.

 

Automotive demand during the quarter has also started to soften in North America, while weakness accelerated during the quarter in automotive markets in Europe. The management said they experienced a sharp decline in demand in North America in most industrial markets, and further weakness in most industrial and specialties markets in Europe. CLICK HERE FOR DETAILS

 

Constellium is a global leader in the development and manufacturing of high value-added aluminium products and solutions, and in aluminium recycling.

 

Demand outlook weakness in the automobile segment is a negative for Hindalco's subsidiary Novelis, which commands a 20 per cent share of Hindalco's volumes and a higher proportion of the company's earnings before interest, taxes, depreciation, and amortisation (Ebitda).

 

Novelis is the world’s largest recycler of aluminium and a leading producer of flat-rolled aluminium products. With a network of advanced manufacturing facilities spread across North America, Europe, Asia, and South America, Novelis delivers high-quality products worldwide.

 

Hindalco, in its FY24 annual report, had said that the global long-term demand for aluminium rolled products remains strong, driven by anticipated economic growth, material substitution, and sustainability considerations, including increased environmental awareness around PET plastics.

 

Moreover, increasing customer preference for sustainable packaging options and package mix shift toward infinitely recyclable aluminium are driving higher demand for aluminium beverage packaging worldwide. To support growing demand for aluminium beverage packaging sheet in North America, Novelis broke ground on a 600 KT capacity greenfield rolling and recycling plant in Bay Minette, Alabama, in October 2022. "Novelis’ plan is to allocate more than half of this plant's capacity to the production of beverage packaging sheet," the company said.

 

Meanwhile, the board of directors of Hindalco is scheduled to meet on Monday, November 11, 2024, to consider and approve the unaudited financial results of the company for the quarter and half-year ended September 30, 2024.