Hindalco Industries (LUX:HINDA) ROC % : 8.66% (As of Mar. 2024)

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What is Hindalco Industries ROC %?

ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. Hindalco Industries's annualized return on capital (ROC %) for the quarter that ended in Mar. 2024 was 8.66%.

As of today (2024-06-03), Hindalco Industries's WACC % is 14.12%. Hindalco Industries's ROC % is 7.35% (calculated using TTM income statement data). Hindalco Industries earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Hindalco Industries ROC % Historical Data

The historical data trend for Hindalco Industries's ROC % can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

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Hindalco Industries ROC % Chart

Hindalco Industries Annual Data

Trend

Mar15

Mar16

Mar17

Mar18

Mar19

Mar20

Mar21

Mar22

Mar23

Mar24

ROC %

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5.07

5.93

11.61

7.44

7.34

Hindalco Industries Quarterly Data
	Jun19	Sep19	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23	Dec23	Mar24
ROC %	Get a 7-Day Free Trial															7.66	7.39	6.22	7.03	8.66

Hindalco Industries ROC % Calculation

Hindalco Industries's annualized Return on Capital (ROC %) for the fiscal year that ended in Mar. 2024 is calculated as:

	ROC % (A: Mar. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Mar. 2023 )	+	Invested Capital (A: Mar. 2024 ))	/ count )
=	2015.866 * ( 1 - 27.53% )	/	( (19222.405	+	20589.269)	/ 2 )
=	1460.8980902	/	19905.837
=	7.34 %

where

	Invested Capital		(A: Mar. 2023 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	27309.658	-	5509.047	-	( 2578.206	-	max(0, 7348.921	-	10838.069	+	2578.206	))
=	19222.405

	Invested Capital		(A: Mar. 2024 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	27933.4	-	4983.173	-	( 2360.958	-	max(0, 7148.88	-	9918.286	+	2360.958	))
=	20589.269

Hindalco Industries's annualized Return on Capital (ROC %) for the quarter that ended in Mar. 2024 is calculated as:

	ROC % (Q: Mar. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Dec. 2023 )	+	Invested Capital (Q: Mar. 2024 ))	/ count )
=	2322.292 * ( 1 - 23.26% )	/	( (0	+	20589.269)	/ 1 )
=	1782.1268808	/	20589.269
=	8.66 %

where

	Invested Capital		(Q: Dec. 2023 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	0	-	0	-	( 0	-	max(0, 0	-	0	+	0	))
=	0

	Invested Capital		(Q: Mar. 2024 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	27933.4	-	4983.173	-	( 2360.958	-	max(0, 7148.88	-	9918.286	+	2360.958	))
=	20589.269

Note: The Operating Income data used here is four times the quarterly (Mar. 2024) data.

Hindalco Industries (LUX:HINDA) ROC % Explanation

ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.

There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.

Why is ROC % important?

Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.

As of today, Hindalco Industries's WACC % is 14.12%. Hindalco Industries's ROC % is 7.35% (calculated using TTM income statement data). Hindalco Industries earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Be Aware

Like ROE % and ROA %, ROC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.

Hindalco Industries ROC % Related Terms

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Hindalco Industries (LUX:HINDA) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Basic Materials » Metals & Mining » Hindalco Industries Ltd (LUX:HINDA) » Definitions » ROC %

Traded in Other Exchanges

HINDALCO:India 500440:India

Address

Pandurang Budhkar Road, Birla Centurion, 6th & 7th Floor, Worli, Mumbai, MH, IND, 400030

Website

https://www.hindalco.com

Hindalco Industries Ltd extracts raw materials and produces and sells industrial metals in the below segments: Copper, Aluminum Upstream and Aluminium Downstream, Novelis, and all other Segment. The Copper segment purchases raw materials and produces continuous cast copper rods, copper cathodes, sulphuric acid, gold, and silver. The firm hedges its copper and other precious metals costs through futures contracts in an attempt to match commodity price changes between the time it purchases the raw materials and sells the finished products. The Aluminum segment mines bauxite and produces hydrate and alumina, aluminum, and aluminum-based products. The majority of Hindalco's revenue comes from India. The firm is also expanding internationally with sales and operations worldwide.

Hindalco Industries (LUX:HINDA) Headlines

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