Hindalco share price up about 2% on sequential improvement in volumes and profitability reported by Novelis Q2 result
Hindalco Industries Ltd’s share prices gained up to 1.81% in the opening trades on Wednesday as its US subsidiary Novelis Inc. performance for the quarter ending September encouraged with per tonne profitability improving for third quarter in a row. The volume recovery also remains a key positive and adds confidence to Hindalco's forward outlook.
Novelis contributes more than half to operating profits for Hindalco. Novelis had seen a significant drop in profitability during the third quarter of FY23 led by destocking of cans in the US market. The performance has continued to improve ever since though on year-on-year basis the impact still is being felt.
Also Read- Dividend stocks: Birlasoft, RITES among 6 stocks to trade ex-dividend today Novelis Earnings before Interest Tax depreciation and amortization (Ebitda) per tonne at $519 improved from $ 479 in the previous quarter. Notably this is now closer to Novelis guidance Ebitda per tonne of $525 by Q4. Novelis net sales at $4,107 million ($4.1 billion) decreased 4% versus the prior year period for the second quarter of fiscal year 2024, primarily driven by lower average aluminum prices and a 5% decrease in total flat rolled product shipments to 933 kilotonnes, partially offset by increased product pricing and favorable product mix.
However, on a sequential basis the volumes grew 6.1% while the net sales were up 0.4%. The performance has encouraged the analysts. Analysts at Motilal Oswal Finacial Services said that they believe Ebitda per tonne improvement in Novelis is a positive development and Ebitda per tonne could be more than $500 ahead on a sustainable basis.
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