India’s Hindalco beats quarterly profit view on strong demand at home and abroad

Hindalco Industries, one of India’s largest aluminium and copper producers, reported a better-than-expected first-quarter profit on Tuesday, on improved performance in its India business and strong demand at its U.S. unit Novelis.

The Aditya Birla Group-owned company posted a 30.3% rise in its consolidated net profit to 40.04 billion rupees ($456.9 million) for the three months ended June 30.

Analysts, on average, had estimated 38.33 billion rupees, according to data compiled by LSEG.

Revenue from its IPO-bound aluminium recycling unit Novelis, which accounts for more than 60% of Hindalco’s overall revenue, rose 15.6%, driven by higher average aluminium prices.

However, elevated aluminium scrap costs and a net negative tariff impact hurt Novelis’ bottom line.

Demand in the auto and canned goods sectors remained strong in the U.S. in the quarter, Managing Director Satish Pai said, adding that steady demand in electricals, packaging, auto, and industrial sectors boosted the India business.

“We are seeing a drop in scrap prices in the U.S., which will likely be favourable for Novelis,” said Pai.

In India, Hindalco’s copper segment recorded a 12% increase in revenue, and its aluminium upstream and downstream segments posted revenue growth of 5.6% and 16.9%, respectively.

Overall revenue from operations rose 12.7% to 642.32 billion rupees, while expenses rose 13.2%, due to a 23% jump in cost of materials consumed.

Rival Vedanta reported a quarterly profit drop, missing analysts estimates, while NALCO’s profit soared 78%.