Hindalco down 15%

Hindalco is currently the top loser on the BSE. The stock price opened 7% lower at Rs.582.35 and slipped down to an intraday low at Rs.496.80, a decline of 15%. Its 52-week low is at Rs.381.

The stock price tanked on account of two reasons – firstly, the disappointing earnings and then followed by the downward revised guidance by Novelis.

Net sales of Novelis declined 6% (YoY) to $3.9 billion for the third quarter of fiscal year 2024, driven by lower average aluminum prices as shipments were in line with prior year levels. Total flat rolled product shipments were 910 kilotonnes in the third quarter of fiscal year 2024 compared to 908 kilotonnes in the prior year period. Shipments were flat due to a decline in specialties product shipments from muted economic conditions in some markets, though more than offset by continued growth in automotive shipments and a return in demand for beverage packaging sheet.

Adjusted EBITDA/tonne increased 33% versus the prior year to $499/tonne but sequentially, it was down 4% from $519/tonne.

More than this, the main disappointment was on management downgrading the return guidance for the Bay Minette project to double digits from the previous mid-teens. This has come as a dampner because this could bring down the growth, earnings and return prospects of the company, when looked at from a 5-year horizon.

The company revised the capex outlay upward for its key growth project—greenfield expansion in North America—by 65% to $4.1  billion (around $2.5 billion earlier) and delayed the timeline by one year to end-FY2027.