Know why this fresh fall in the Hindalco stock related to Constellium’s earnings; What should investors do now?
Hindalco Share Price: Shares of Hindalco Industries dropped as much as 7 per cent to a low of Rs 666.80 on the BSE on Thursday, making it the top loser in the Nifty. This decline followed weak quarterly results from Paris-based aluminum products maker Constellium, which reported a 5 per cent year-on-year decrease in Q3 revenue, raising concerns for Hindalco.
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Experts attributed the fresh fall in the stock to Constellium’s earnings report. Constellium is a global major in the manufacturing and recycling of aluminium products. Shares of Constellium crashed 28 per cent overnight after it reported the results.
Constellium’s earnings report card, which showed its Q3 revenue falling 5 per cent year-on-year (YoY), has weak takeaways for Hindalco.
During the quarter, Constellium saw softening demand in automotive markets in North America and Europe, as well as sharp declines in most industrial markets in North America and further weakness in industrial and specialty markets in Europe.
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“Our team faced significant challenges in the third quarter, including increased demand weakness across several of our end markets, and the ongoing impact from the flood that occurred back in late June at our facilities in the Valais region in Switzerland,” said CEO Jean-Marc Germain.
Demand outlook weakness in the automobile segment is a negative for Hindalco’s subsidiary Novellis, which commands a 20 per cent share of Hindalco’s volumes and a higher proportion of the company’s EBITDA, CNBC TV-18 reported.
In the June quarter, Hindalco had reported a consolidated net profit of Rs 3,074 crore for the quarter ended June 30, 2024, a 25 per cent jump from Rs 2,454 crore reported by the company in the year ago period.
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The revenue from operations for the reporting quarter stood at Rs 57,013 crore, which was up by 7.6 per cent from Rs 52,991 crore reported in the corresponding quarter of the previous financial year.
Experts pointed out that Constellium’s earnings report acts as a benchmark for assessing industry health. The company’s weak earnings have led to investors’ cautious approach toward Hindalco.
Hindalco will report its September quarter earnings on November 11.
Constellium SE is a Paris-based global manufacturer of Aluminium-rolled products, extruded products and structural parts, based on a large variety of advanced alloys.
Shares of Hindalco Industries are trading 6.6 per cent lower currently at Rs 670.4. The stock is currently the top loser on the Nifty 50 index. On a year-to-date basis, the stock is up 10 per cent so far.
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