BENGALURU, Feb 13 (Reuters) - Aditya Birla Group-owned Hindalco Industries reported a smaller-than-expected third-quarter profit on Tuesday, hurt by weak aluminium sales at its U.S. unit, Novelis.
Hindalco's stock price tumbled 12.5% but that was mostly due to a disappointing forecast and higher spending plans from Novelis, the world's largest aluminium recycler that accounts for three-fifths of Hindalco's revenue.
Hindalco's consolidated profit grew 71% year-on-year to 23.31 billion rupees ($281 million) in the quarter, but missed analysts' estimates of 24.05 billion rupees, according to LSEG data.
Aluminium prices were down from a year earlier, while some metals' manufacturing activity fell in the quarter, which analysts attributed to a seasonal slowdown.
As a result, Hindalco's revenue from operations inched down 0.6% to 528.08 billion rupees, largely due to a 6% drop in Novelis's sales.
Novelis also adjusted its forecast for project returns to 'double-digits' (in percentage terms) from 'mid-teens' and said it would take longer to start projects.
It also raised its capex outlay for key project by 65%, which an analyst said damages Hindalco's "growth, earnings and return prospects from a 5-year perspective".
Hindalco's domestic aluminium sales, which account for a fifth of the total revenue, fell 1.6% in the quarter.
However, higher copper prices helped offset some of the weakness in its aluminium business. Sales in its copper segment climbed 16%, accounting for roughly a fifth of total revenue. ($1 = 82.9930 Indian rupees)
Reporting by Manvi Pant and Varun Vyas in Bengaluru; Editing by Rashmi Aich and Savio D'Souza
Source: Reuters