Strong performance of subsidiary gives good hope to Hindalco
The shares of Hindalco Industries reacted positively to the strong financial performance of its subsidiary company, Novelis for the recent quarter. In the latter half of the trading session, the stock slipped into a negative territory due to weak market breadth.
Hindalco Industries is one of the largest aluminum rolling and recycling company in the world. Novelis is its wholly-owned subsidiary, acquired in 2007. The results of the subsidiary are being considered good as it is reflecting strong operating performance. The quarter, in which the world faced huge disruption due to Coronavirus-led lockdown, the results were not expected to be much strong. EBITDA grew by seven per cent as against previous year, to $383 billion. The top-line, though, is down by 12 per cent to $2.7 billion due to lower shipments as well as aluminum prices.
In FY20 annualised operating profit of Hindalco, more than 70 per cent share is expected to come from Novelis Inc. In subsequent conference call, the management threw light on the fact that its EBITDA/tonne (quarterly) target of $420-440 may not be achieved in the current scenario.
The stock closed at Rs 117.10, down by 0.4 per cent on BSE.