Hindalco, Aditya Birla Group's flagship company, today reported a 4 per cent fall in net profit at Rs 433.52 crore in the December quarter amid higher finance cost of Rs 169 crore, but sees growth ahead on account of its mega projects going on stream next fiscal.
"Our financial cost more than doubled to Rs 169 crore in the reporting quarter against Rs 79 crore in the same period last year due to higher borrowings," Hindalco Managing Director D Bhattacharya told reporters here this evening.
During the quarter, the company drew USD 100 million finance from the Export Development Canada (EDC), the export credit agency, for its Mahan Aluminium Project.
Net sales moved up to Rs 6,789.90 crore during the quarter vis-a-vis Rs 6,590.23 crore in the corresponding period, he said.
The other income contributed to a whopping Rs 312 crore as one-time earnings, which includes Rs 144 crore treasury income in the said quarter, he added.
Though the numbers were above street expectation, the Hindalco stock was battered as the numbers were boosted by a one-time income, and not core operations, analysts said.
The stock fell 3.2 per cent to Rs 109.75 on the BSE.
Commenting on the numbers, Nirmal Securities senior analyst Giriraj Daga said though the standalone performance is in line with his expectation but its overall net profit beat expectations due to a one-time gain of Rs 144 crore and not from operations.
He also noted that the company's other income jumped 253 per cent y-o-y and 140 per cent q-o-q to Rs 318 crore due to one-time non-recurring income.
"Our assumptions in respect of LME aluminium prices are at USD 2,000 per tonne and USD 2,020 for FY13E and FY14E, respectively, and at these prices Hindalco's expansion will be value dilutive due to meagre return ratios.
The demand for aluminium continued to remain flat at 12 per cent level, Bhattacharya said.
Company's revenues from aluminium business were down nearly 1 per cent to Rs 2,215.45 crore, while revenues from copper business were up 5.49 per cent to Rs 4,660.84 crore in the quarter.
Aluminium production was marginally lower at 326 Ktpa (kilo tones per annum) due to lower production at the Belgaum refinery, reflecting constraints in the availability of bauxite for this plant.
Bhattacharya also said the mega projects Mahan Aluminium, Hirakud FRP and Utkal Alumina projects are expected to commence production by April and hopes to ramp up production subsequently.
Aditya Aluminium is expected to commence production in mid-2013, he added.
The company has employed capital of Rs 29,821 crore in aluminium business as of December, which includes Rs 20,971 crore pertaining to new investments in Mahan Aluminium, Hirakud FRP and Aditya Aluminium projects.
The company's gross debt stands at Rs 20,000 crore, with a cash balance of Rs 8,000 crore, and the net debt works out to Rs 12,000 crore.
Commenting on the outlook, Bhattacharya said, with the project going on stream in the near-term, Hindalco is well poised to take the business to the next level.
Aluminium consumption in global market is good and demand is expected to touch 60-70 mt by 2020 from the present 46 mt.
The domestic growth is flat at 12 per cent though the demand prospects are good given the low level of country's per capita consumption of aluminium at 1.8 kg compared to 12 kg globally and 6 kg of China, Bhattacharya said.