Hindalco's Copper Biz May Double Value-Added Products Contribution

With the view to uplift its copper earnings, Hindalco Industries is set to more than double the contribution of the value-added products to the red metal business in the early part of 2018.

According to J C Laddha, group executive president at Birla Copper, the copper division of Hindalco Industries the company’s copper unit expansion is underway and it will take the contribution of value-added products to 80 per cent from the low of 35 per cent at present. He was speaking on the sidelines of India Copper Forum held in the last week of December 2016.

With an investment of a little more than Rs 200 crores, the company has planned the commissioning in the first quarter of the year 2018.

Laddha further added that since premiums for value-added products are higher, the focus is on this particular segment. The company also has a separate team dedicated to look at which all value-added products can be added to the copper business so that earnings improve.

Though the company's copper business normally contributes somewhere around 25 per cent to the company's profits and 65 per cent to its revenue in select quarters last year, the business held the fort for the company since the weak aluminium prices made the situation tough for Hindalco.

The Aditya Birla Group firm has a copper smelter complex located at Dahej in Gujarat which produces copper cathodes as well as continuous cast copper rods of various sizes.

Though this expansion under discussion is expected to churn better earnings for Hindalco's copper business, analysts expect that in the overall scheme of things, the number is small for Hindalco Industries.

Meanwhile, Hindalco Industries' peer in the copper business, Vedanta, is also doubling its copper capacity at Tuticorin in Tamil Nadu and plans to take it up to 800,000 tonnes and has already received environmental clearance from the authorities.

P Ramnath the chief executive officer at Sterlite Copper said that their expansion will cater to the overseas market as domestically the demand is getting eaten up by imports.

Currently, Vedanta India is the second-largest copper producer in the country after Hindalco Industries. India imports about 97 per cent of the copper concentrate to produce finished products. With the rising imports of finished copper products, the domestic industry has recently urged the government to remove the 2.5 per cent import duty on copper concentrate.

Hindalco share price was seen trading at Rs 171.65, down by 2.53 per cent at 3.10 PM on NSE.

Hindalco Trades at New 52 Week High over Strong Q2

After the net profit of Hindalco Industries surged 256.18% to Rs 439.74 crore on 1.28% rise in total income to Rs 9,494.40 crore in Q2 September 2016 over Q2 September 2015, Hindalco share pricegained 4.84% to Rs 180.65 on the NSE. The stock traded at its new 52 weeks high at Rs. 180.65. On NSE, so far approximately two crores shares were traded in the counter.

The result was announced on Saturday, 12 November 2016. The stock markets were closed on Monday, 14 November 2016, for a public holiday.

Hindalco Industries said that in aluminum division, the company delivered robust operational performance in Q2FY17 in a challenging macroeconomic environment because of efficiency gains and lower input costs. Enhanced visibility over coal sourcing and cost and major portion of requirement secured through linkages, Hindalco Industries said. In copper section, copper performance rebounded strongly in Q2 September 2016 after the successful completion of planned maintenance shutdown.

Aluminum production went up by 19% to 321 KT (Kilo Tonne) in Q2FY17 over Q2FY16, significant cost efficiencies achieved across the plants. Inputs costs were largely helpful though crude derivative prices hardened sequentially.

Aluminum Value Added Products (FRP and Extrusions) increased 8%, Wire Rod Production rose 36% reflecting the company’s focus on power and other growth sectors. The company dispensed highest ever quarterly copper production at 106 KT, after victorious planned annual maintenance shutdown. Improved efficiencies aided offset sharp decline in sulphuric acid prices.

Meanwhile, at 1:02 PM, Hindalco share price was trading at Rs. 168, down by 2.50% despite strong Q2 results. Over two crores shares were traded over the NSE counter so far.

Revenues for Q2 September 2016 were broadly stable, as the effect of higher aluminum revenues was largely annulled by a sharp decline in copper realization, it added. Subsequent to a notification issued by the Ministry of Coal making applicability of contribution to District Mineral Foundation effective retrospectively from 12 January 2015, a one-time provision of Rs 60 crore has been made during Q2 September 2016 and is included in exceptional items.

Hindalco Industries said that the macroeconomic headwinds still continues and the uncertain global macro factors create several challenges. The price recovery is susceptible to imminent Chinese capacity additions and smelter restarts. The high level of imports persists to impact domestic sales volumes. Hindalco remains focused on operational excellence, higher value addition, customer centricity and cash conservation to tide over these issues.

Hindalco Industries’ board of directors permitted raising of long term finance by way of public or private offerings by means of equity or equity-linked instruments on preferential allotment basis through Qualified Institutional Placement, Rights Offer, Global Depository Receipts, American Depository Receipts and Foreign Currency Convertible Bonds of up to Rs 5000 crore.

A part of the Aditya Birla Group, Hindalco Industries is the world’s biggest aluminum rolling company and one of the largest producers of primary aluminum in Asia. Its copper smelter is amongst the largest single location custom smelter globally.

Hindalco is the top 500 recommendation by Dynamic Levels for the quarter. For the details on the stock, visit Hindalco share price history page of Dynamic Levels website.

Hindalco Stressed Ovaer Labour Union Groups Clash

Tension gripped Hindalco on Friday after two groups of labour unions of the company clashed with each other in Hirakud. Both the groups were claiming to be the genuine union. At least 130 contract labourers were taken into preventive custody by the police to avoid any untoward incident and because they were congregating in front of the main gate of the company violating the prohibitory orders. Owing to the situation, Hindalco share price tanked around 6% on NSE as the trade opened today thus turning out to be the top loser so far.

Sources said, a labour union of Hindalco had split into two groups, and each of them is claiming to be the genuine union and using the same registration number. They had even included the office of Deputy Labour Commissioner over the issue. With the issue awaiting disposal, one of the two groups decided to hold a meeting in front of the main gate of Hindalco on Friday. The apprehending clash between the two groups, the company’s management informed the police to avoid any troublesome situation.

Meanwhile, Hindalco share price stood on the firm value of Rs. 146.05 and is holding on to it.

Subsequently, Section 144 of CrPC was publicised in Hirakud from the wee hours of Friday. Labour leader Sudesh Nag said they have decided to present a demonstration in front of the DLC office at Sambalpur on Friday. He asserted that the members of the union had gathered in front of Hindalco main gate to go to Sambalpur, but police took them into custody which is groundless.

Speaking on other issues, Nag said that in July last year, the Government had issued a notice to hike wage by Rs. 50 per day for contract labourers. Though the union has been demanding payment of revised wages since long, the management has turned a deaf ear. Even the DLC was notified of the issue but in vain.

Hindalco is top 500 performing stocks picked by Dynamic Levels for the quarter. For details on the stock, visit Hindalco share price history page of Dynamic Levels website.

Hindalco leaves Market Expectations behind

Aluminum giant, Hindalco Industries' first quarter profit exceeds analysts' expectations, rising nearly 5-fold to 381.2% year-on-year standing at Rs 294 crore. It was on the account of better operational performance in spite of fall in revenue and higher tax cost. Revenue during the quarter missed the estimates, tanking 11.4% to Rs 7,597.3 crore on the yearly basis due to the sharp decline in realizations. Along all the rises, Hindalco share price also went up by almost 2% in today’s trade.

Hindalco adjusted the profit of the last financial year at Rs 61.1 crore against the reported profit of Rs 107.2 crore, owing to the new accounting standards. The market estimated the profit at Rs 218 crore on revenue of Rs 8,650 crore for the quarter. Despite the fall in realizations, the aluminum business grew by 7.5% to Rs 4263 crore on strong volume growth. Aluminum business contributes 56% to the total revenue. Segment’s EBIT climbed 63.9% while the revenue from its copper business fell 27.7% to Rs 3,336 crore on lower production due to planned maintenance shutdown. EBIT also dropped 28.7% to Rs 283.7 crore on Y-o-Y basis.

Meanwhile, Hindalco share price was currently trading at Rs. 146.10 with the rise of almost 3%.

The company’s Operating profit grew by 34.9% to Rs 1,231.7 crore, far ahead of the estimates, and margin expanded by 560 basis points to 16.2% compared with the corresponding quarter of last financial year. Analysts had estimated the Operating profit at Rs 960 crore, and the margin expanded 11.1% for the quarter, respectively.

Hindalco said that Operational performance was also supported by deflationary energy prices. The company also stated that the macroeconomic headwinds are persisting, and the uncertain global macro factors pose several challenges. The cost of Power & fuel declined 9.7% YoY to Rs 1,485 crore, and raw material cost went down by 24% to Rs 3,973.2 crore in the quarter ended June 2016. Other income during the quarter increased 30% to Rs 119.2 crore while finance cost fell 0.7% to Rs 599.57 crore on yearly basis. Tax expenses went up considerably to Rs 118.9 crore from Rs 8.62 crore in the same period.

Hindalco is among top 500 performers for the quarters picked by Dynamic Levels. The stock has strong fundamentals and the company has not incurred losses in past two-quarters. For more details on the stock, pay a visit to the Hindalco share price history and Hindalco share price forecast page of the website.