- India’s No. 2 aluminum producer names new managing director
- Shares surge 12% and are the best performer in Nifty 50 Index
Hindalco Industries Ltd. shares surged after India’s second-biggest aluminum producer more than doubled profit in the fourth quarter and named a new managing director to lead the company.
Hindalco appointed Deputy Managing Director Satish Pai from Aug. 1 to replace D. Bhattacharya, who resigns after helming the billionaire Kumar Mangalam Birla-owned company since 2003. Pai, 54, will have a five-year term, according to a statement Saturday, while 67-year-old Bhattacharya will continue as a non-executive director.
The company was the top performer on the NSE Nifty 50 Index, rising 12 percent to 102.95 rupees at close in Mumbai, the biggest daily increase since May 2009. The shares have climbed 21.5 percent this year, rebounding from a 46 percent slump in 2015.
Hindalco’s net income rose to 3.56 billion rupees ($53 million) in the three months through March, from 1.60 billion rupees a year earlier, according to a separate statement. Sales fell 7.4 percent to 85.4 billion rupees, slightly above estimates, while total costs dropped 11 percent to 78.4 billion rupees.
“A strong increase in aluminum volumes following increased production and our thrust on value addition across businesses helped us partially offset the impact of a sharp fall in realizations,” the company said.
The numbers are extremely strong and the company has achieved significant cost reductions, Pritesh Jani, an analyst at Religare Capital Markets Ltd., said by phone from Mumbai. “Even at lower profitability, this year they will have some free cash flow to retire debt.”
Pai has been with the company for some time and the management change will not affect operations, Jani said. Hindalco should benefit as London Metal Exchange aluminum prices recover, Credit Suisse Group AG said in a report Monday.