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ICICI Direct Report
Hindalco Industries Ltd.'s subsidiary Novelis reported a healthy performance in Q1 FY23 wherein it reported quarterly adjusted Ebitda/tonne of $583/tonne (up 33% QoQ).
On the back of a healthy operational performance during Q1 FY23, Novelis has upward revised its full year Ebitda/tonne guidance to $525/tonne from $500/tonne earlier.
During Q1 FY23, coal sourcing for Hindalco's India aluminium business was as follows - ~ 50% of the requirement was met through linkage coal, ~ 31% was met through e-auction coal and balance was met through imports and captive mines.
For Q2 FY23 also, the coal sourcing mix is likely to be similar to Q1 FY23. However, from Q3 FY23 linkage coal sourcing is likely to increase to ~60-65%.
With higher proportion of linkage coal in overall coal sourcing mix, Hindalco's India aluminium business cost of production is likely to decline in Q3 FY23, thereby auguring well for the company.
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