Hindalco beats Q1 estimates, remains cautious on bauxite auctions
Mumbai: Hindalco Industries Ltd beat estimates in the June quarter but signalled it would not let buoyant profits dictate its bidding strategy, saying it will
Mumbai: Hindalco Industries Ltd beat estimates in the June quarter but signalled it would not let buoyant profits dictate its bidding strategy, saying it will remain financially disciplined while pursuing bauxite mines despite record auction premiums and intensifying competition. The Aditya Birla Group metal flagship reported an almost 75% jump in net profit attributable to owners to ₹7,013 crore in the quarter from ₹4,004 crore a year ago, according to exchange filings. Profit beat the ₹5,809 crore estimate of 17 Bloomberg analysts. The company's consolidated revenue rose to ₹84,825 crore for Q1FY27 from ₹64,232 crore, while consolidated Ebitda stood at ₹14,989 crore, up 73% year-on-year. "We have existing mines, and as we expand, we are looking to acquire new mines. But it would be fair to say that we are going to be a lot more financially prudent," managing director Satish Pai said in a post-earnings media briefing on Friday.
Also Read | Why Hindalco wants to build a nuclear reactor Without specifying a bidding threshold, Pai said the company would avoid paying excessively high premiums that could permanently raise production costs. Competition for bauxite resources is heating up, with Vedanta Aluminium Metal Ltd emerging as the highest bidder for the Karlapat bauxite block in Odisha after quoting a record auction premium of 175%. Vedanta Aluminium reported nearly 50% growth in revenue to ₹21,105 crore, while its profit more than tripled year-on-year to ₹5,629 crore, aided by higher aluminium prices. All-round growth Pai said all of Hindalco's businesses performed well during the quarter, with Novelis showing signs of recovery after operational disruptions, while aluminium downstream and copper businesses also delivered strong earnings. “The momentum is building over the remaining three quarters of this fiscal year. Novelis coming back this year is going to be a significant upside for Hindalco,” he said.
Hindalco expects input costs to rise further in the September quarter, Pai said, adding that costs could increase by 4-5% sequentially as higher natural gas and furnace oil prices begin to flow through. However, the impact in the first quarter was cushioned by lower-cost inventories, and Pai expected costs to peak in the second quarter before easing in the subsequent quarters. Responding to questions on whether competition for the mineral would become tougher, Pai acknowledged new entrants but said Hindalco's existing asset base gave it an edge. “We do know that competition will come. But we have been in this business for over 20 years. We have an established base, we have assets on the ground, land on the ground from where we can build on. We will focus on our strengths and make sure that we keep our cost curve in the right place,” he said. In July, billionaire Gautam Adani unveiled plans to enter the aluminium business through a $11.5 billion joint venture with Abu Dhabi-based International Holding Company (IHC), marking a direct challenge to market leaders Hindalco Industries and Vedanta.
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