Fires at Novelis singe Hindalco profit by 45%

The Aditya Birla Group’s flagship reported an almost 45% drop in net profit attributable to owners. ₹2,049 crore, downwards ₹3,735 crore a year ago and much lower than this figure ₹The average estimate from the Bloomberg survey is 4,141 crore.

Two fires at the Novelis plant in Oswego on September 16, 2025, and November 20, 2025, disrupted aluminum supplies to the automotive industry and can manufacturers. The decline in Hindalco’s profits was mainly due to: ₹2,610 crore in one-time expenses related to the Oswego outage.

Novelis accounted for 57% of Hindalco’s revenue in the December quarter. Hindalco reported a 14% increase in consolidated revenues of 66.521 billion rupees, driven by increased copper and aluminum sales in the domestic market. EBITDA increased by 5% to Rs.8,543 crore.

On Wednesday, Hindalco informed stock exchanges that its 2026 cash flow will be impacted by $1.3-1.6 billion due to the Novelis fires.

recovery plans

The company expects to recover 70-80% of the fire impact through insurance and the hot rolling mill is expected to be operational in the first quarter of FY27, Satish Pai, managing director of Hindalco, said in a media briefing.

Pai also explained that strong performance in India and higher aluminum and copper prices helped offset the impact of foreign subsidiary disruption.

“If you look at this very strong India performance, which I think will continue strong in the fourth quarter, that helped us detract from Novelis’ performance in some ways,” Pai said.

Pai also said Novelis’ performance is expected to improve in the fourth quarter due to improving scrap margins and cost-cutting efforts. Scrap spread is the difference between the selling price of aluminum products and the cost of the scrap aluminum used to make them. Novelis uses only scrap.

“We will put $1 billion of equity into Novelis through AV Minerals,” Pai said, adding that this will help the company over the next six to eight months.

In the second quarter, Pai guided the infusion of $750 million of equity capital into Novelis to be raised as debt through its Dutch subsidiary AV Minerals (Netherlands).

Pai reiterated his focus on getting Oswego back up and running by completing the Bay Minette project in Alabama. Bay Minette, Novelis Inc. It is the site of a new $5.5 billion low-carbon aluminum recycling and rolling facility being built by . The company plans to commission this project in October.

India’s gains offset pressure

Going forward, India will continue to support growth with some spillover effects from the Novelis event.

“If you look at this very strong India performance, I think it will continue strongly in Q4,” Pai said. “Novelis’ performance will improve, but the impact of Oswego will still be there, and you will see a full recovery of Novelis once the plant comes online in June next year.”

Hindalco’s India business is doing well because aluminum prices are high, said Suman Kumar, vice president of metals and mining at broker Philip Capital. “Because the company’s own bauxite mines were fully integrated, its costs remained constant, so when prices rose, profits increased. Copper wasn’t the primary driver; aluminum drove the gains.”

“The core business for Novevis is fine. The loss was due to one-off issues like the Oswego plant fire and the tariff impact. If you remove those, the performance has actually been much better,” Kumar said. As the Oswego plant will reopen in June and capacity will increase in FY26, management expects Novelis to improve from here and believes the worst phase is over, he added.