The market seemed impressed with Hindalco’s performance in Q2, as the stock price rallied by about 3 per cent after the results announcement.

The company's revenue (India operations) stood at ₹10,833 crore for the quarter, up 5 per cent YoY, while net profit increased by a robust 54 per cent to ₹725 crore.

Lone performer

But on a closer look, the earnings picture doesn’t look bright. The Indian business was backed by good performance only in the alumina segment.

The operating profits of the aluminium and copper segments were lower YoY.

However, in the overseas aluminium segment, Novelis has shown a strong performance. Revenues from this segment grew 12 per cent to $3.1 billion, driven by higher average aluminium prices, increased shipments and favourable product mix. The operating profits increased 18 per cent YoY to $355 million and the operating profit per tonne rose to $440 from $377 a year ago. This could be on account of a 9 per cent YoY rise in high-margin automotive sales.

Revenue from the aluminium segment (excluding Utkal Alumina ) rose about 18 per cent to ₹6,135 crore on account of increased realisations and favourable macroeconomic factors that pushed up demand.

Margin pressure

But the increased costs caused pressure on the margins and led the operating profits to come down by around 23 per cent to ₹744 crore.

However, the operating profit from the same segment, including Utkal, went up 13 per cent to ₹1,364 crore. The increase in operating profit margins — from around 11.5 a year ago to 12.5 per cent this quarter — could be due to the increased realisations from alumina.

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