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Centrum Broking Report
Novelis (Hindalco Industries Ltd.'s 100% subsidiary) reported better-than-expected adjusted Ebitda of $561 million (our estimate: $501 million), up 10% YoY/30% QoQ, and Ebitda/tonne of $583 (our estimate: $501/tonne), up 12% YoY/34% QoQ.
Better pricing while renewing contracts, higher scrap spread and improved product mix led to growth in profits. The profitability improved in all regions except Europe where it was hit by higher energy cost and lower auto volume on a YoY basis.
The scrap spread is on a decline in America and as a result, despite high profitability in Q1 FY23, Novelis revised its sustainable Ebitda/tonne guidance to $525 from $500 plus earlier.
However, this guidance should be treated positive as it has been provided despite fear of recession in developed world.
Our FY23E Ebitda is unchanged while we increase FY24E Ebitda by ~1% (Ebitda/tonne of $530 in FY23E and $541 in FY24E).
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