Total copper metal sales, too, improved 5 per cent YoY, but again, the segment’s profit at Rs 263 crore was down by about 35 per cent YoY, primarily because of the monsoon-related impact on operations and lower realisations of byproducts such as diammonium phosphate and sulfuric acid. Treatment charge and refining charge (TC/RC margins) — a profitability indicator — also remained weak.
The outlook for aluminium and copper prices remains challenging, looking at global headwinds and uncertainties related to the US-China trade war. However, analysts say strong performance by Novelis
in a challenging environment for aluminium producers and Hindalco’s integrated domestic operations will support consolidated earnings.
Novelis, which is a convertor of raw metal into value-added aluminium products, continues to focus on improving operational efficiencies, innovations, and is upgrading its automotive recycling facility in Greensboro, Georgia.
Analysts say the demand for aluminium from the US auto industry remains favourable and there are supply constraints for aluminium cans too. The management has been guiding for a sustainable per tonne profitability of over $400.
had reported an adjusted per tonne profit of $448 in Q2 of 2019-20 (FY20), up 2 per cent YoY. Analysts at Motilal Oswal, while remaining conservative on Novelis’ per tonne profitability, still estimate it at $442 and $401 in FY20 and 2020-21 (FY21), respectively. Analysts believe the stock trades at attractive valuations of 5.7x enterprise value/operating profit and 9x price-to-equity, based on FY21 estimates.
Progress on the acquisition of Aleris, which Hindalco
is positive of closing in the stipulated time of January 21, 2020, is another trigger.