Top Indian Companies: Hindalco Industries Ltd

Hindalco Industries Limited an Indian aluminium and copper manufacturing company, is a subsidiary of the Aditya Birla Group. Its headquarters are at Mumbai, Maharashtra, India.

The company has annual sales of US$15 billion and employs around 20,000 people. Hindalco is one of the world's largest aluminium rolling companies and one of the biggest producers of primary aluminium in Asia. Hindalco is part of Nifty 50 and has a weightage of 0.82%.

Brief History

The Hindustan Aluminum Corporation Limited was established in 1958 by the Aditya Birla Group. In 1962 the company began production in Renukoot in Uttar Pradesh making 20 thousand metric tons per year of aluminium metal and 40 thousand metric tons per year of alumina. In 1989 the company was restructured and renamed Hindalco.

Operations

Novelis

On 11 February 2007, the company entered into an agreement to acquire the Canadian company Novelis for US$6 billion, making the combined entity the world's largest rolled-aluminium producer.

Other acquisitions

In June 2000, acquisition of controlling stake in Indian Aluminium Company Limited (Indal) with 74.6 per cent equity holding.

In July 2007, Hindalco announced it is acquiring the stake of Alcan Inc.'s in the Utkal Alumina Project located in Doraguda, Odisha.

On 15 April 2020, Hindalco Industries acquired US-based Aluminium rolled products manufacturer Aleris Corporation. Hindalco's Novelis' entry into the high-end aerospace segment, this deal has been closed at an enterprise value of $2.8 billion.

Shareholding Pattern

Holder's Name No of Shares % Share Holding

Noof Shares 2247169840 100%

Prom others 763922188 33.99%

Foreign Institutions 584112515 25.99%

Banks Mutual Funds 269996766 12.01%

Central Govt 287480 0.01%

Others 274030547 12.19%

General Public 127022828 5.65%

Financial Institutions 205582680 9.15%

Foreign Promoter 14542309 0.65%

GDR 7672527 0.34%

FY2023 Q4 and Full Year Results

Hindalco reported a 37 per cent fall in its consolidated net profit to Rs 2,411 crore for the March quarter due to a rise in operational costs.

The company had posted a net profit of Rs 3,860 crore during the January-March quarter of 2021-22, the company said in a regulatory filing.

Total income of the company was Rs 56,209 crore in the quarter under review against Rs 56,057 crore in the year-ago quarter.

The expenses were higher at Rs 53,372 crore against Rs 51,026 crore a year ago due to a rise in power and fuel charges, employee benefit expenses and inventory costs.

The company's Managing Director (MD) Satish Pai in a statement said, "Our copper business delivered exceptional results recording its highest-ever EBITDA, driven by robust market demand, stable operations and higher value-added product sales.

"We also continue to drive our holistic ESG approach with specific targets that go beyond carbon emissions, and encompass other planet-critical aspects like waste, biodiversity, water positivity, and community inclusion."

He further said Novelis has shown quarter-on-quarter recovery supported by improved product pricing and favourable product mix.

Novelis, Hindalo's Atlanta-based subsidiary, reported a 7 per cent year-on-year (y-o-y) fall in its net income at USD 175 million during the quarter, the company statement said.

"Its total shipments of flat rolled products were at 936 kt (kilo tonne) in Q4 FY23 vs 987 kt in Q4 FY22, down 5 per cent y-o-y, and up 3 per cent q-o-q supported by higher aerospace and record automotive shipments in Q4.

"Its revenue in Q4 FY23 stood at USD 4.4 billion over USD 4.8 billion in FY22, down 8 per cent YoY, impacted by lower average aluminium prices and subdued sales volume y-oy," it said.

Hindalco shares declined by 0.77 per cent to settle at Rs 407.05 on BSE

Brokerage Outlook

Key risk is LME price correction as the conflict resolves, given all-time high premium of LME Al to the cost of the 90th percentile smelter globally. Any impact on demand is also an unknown. IIFL Securities, Brokerage, reiterate BUY on Hindalco, with TP of Rs650.

ESG and Sustainability

In line with global climate goals, Hindalco have adopted a well-defined energy management strategy to reduce our energy consumption.

Hindalco undertook various energy savings initiatives at our plant locations, resulting in a corresponding reduction of 0.07 million tCO2e emissions.

At Hindalco, resource conservation has always been our focus as we largely depend on raw materials sourced from nature. We have adopted a multi-dimensional approach to resource efficiency which helps us minimise usage of virgin materials and source recycled input materials.

Reduction of freshwater consumption, water recycling/reusing and water saving initiatives are part of our water management strategy. We also make sure our effluent discharge does not significantly impact any water bodies in our vicinity.