Hindalco’s domestic biz fires up Q2 earnings, net profit up 18% q-o-q

Jump in profitability due to higher inventory reduction ₹3,080 crore ₹1,644 crore — published approx. ₹1,436 crore in working capital, helping cash flows and margins. He highlighted the company’s ability to benefit from rising aluminum prices and operational efficiencies, even as copper sales were falling and jewelry subsidiary Novelis was struggling with a devastating fire at its U.S. factory and its profitability was weak.

Managing director Satish Pai attributed the increase to “disciplined cost management and strong contributions from the India business”. This comes as the global aluminum market boomed, with prices on the London Metal Exchange rising from $2,350-2,400 per tonne in the April-June period to $2,450-2,550 per tonne in the September quarter.

Consolidated revenue increased 13.5% year-on-year, driven by higher aluminum realizations and 15% volume growth in the production and sales segments. Net profit increased by 21.3% on an annual basis.

With this performance, Hindalco became the leader in its segment and overshadowed the net profit of state-owned Nalco. ₹1,430 crore and diversified group of Vedanta ₹1,798 crore profit.

“Inventory movement has been improved as follows: ₹1,436 crore, which indicates further decline in inventories and a positive impact on working capital, cash flows and profit,” said Suman Kumar, vice-president, metals and mining, Philip Capital.

india aluminum

Hindalco’s domestic powerhouse, India’s manufacturing vertical, saw revenue rise to 100,000 ₹10,078 crore and EBITDA, up 10% from previous year ₹4,524 crore. Volumes increased by 341 kilotonnes (kt) in the second quarter, driven by post-monsoon demand for infrastructure and the automotive sector.

Revenue from downstream aluminum, Hindalco’s value-added arm, ₹3,809 crore and EBITDA increased by 20% compared to the previous year ₹261 crore, thanks to higher shipments of extruded and flat rolled products for renewable energy sources and electric vehicles (EVs).

Copper lagged behind, revenue fell ₹14,563 crore and fell to EBITDA ₹634 crore is under pressure due to variable copper processing charges and energy costs. “There has been no decrease in copper sales. On the contrary, the demand in the copper market is quite strong due to the impact of electric vehicles,” Pai said.

Novel support

Contributing over 60% to group revenue, Novelis continued to be Hindalco’s stabilizer, posting sequential revenue growth of 2.6% in 2019. ₹41,418 crore and EBITDA increased by 3.6% ₹3,685 crore, flat year on year but resilient despite headwinds.

Shipments held steady at 950 kt with record beverage can volumes, supported by leadership of 63% recycled content. Automotive sheets rose 5% to 180 kt, leading EV lightweighting trends.

On September 16, a fire at the Oswego plant in New York (confined to the hot mill) caused $650 million in damage ( ₹5,500 crore) was a hit. Its restart is planned for the end of December, with full ramp-up expected within four to six weeks. Insurance covers property and business interruptions, subject to deductibles, and alleviates much of the pain. Hindalco, through its Dutch subsidiary AV Minerals (Netherlands), will make an equity donation of $750 million to Novelis to be used as debt.

“Novelis’ sequential EBITDA per tonne nevertheless improved, driven by box volumes and efficiency programs targeting operating rate savings of $125 million by the end of FY26,” Managing Director Pai said.

Mitigation measures are also being taken to offset the impact of Trump’s tariff impact and should be implemented by the end of this year.

Pai said the measures include relocating some manufacturing from Canada to the United States.

Novelis raised $850 million of low-cost debt ($750 million of 2033 Senior Notes at 6.375%; $100 million of tax-exempt bonds) to fund global expansion. At the center of Bay Minette Capex Novelis’ growth story and Hindalco’s $10 billion global capital expenditure drive is the Bay Minette greenfield facility in Alabama, USA.

The first 600 kt integrated rolling-recycling facility built in the United States in 40 years reached major milestones in Q2: equipment installation and workforce training progressed, putting it on track for commissioning in the second half of 2026. Investment expenditures were revised to 5 billion dollars ( ₹42,000 crore), a 22% increase over the revised amount of $4.1 billion in February 2024 and a 100% increase over the original figure set in 2022. Pai said contingency plans are in place and he is confident the company will adhere to revised capital expenditure guidelines.

“The Street is skeptical about the economics of the project; an upward revision of capital expenditures could impact rates of return. Novelis’ second cost revision for the Bay Minette project is currently pegged at $5.5 billion, which appears to be largely due to US inflation and higher labor costs. This cost overrun could be of some concern among investors and should be monitored,” he said.

“Capital expenditure revisions were made considering the complexity of the project. However, we now intend to stick to the revised guide. We plan to commission the cold rolling facility by February 2026 and the hot rolling facility by September,” he said.

According to Aditya Welekar, senior metals research analyst at Axis Securities, India Business remained strong, covering up any weakness in the foreign subsidiary.

“The only issue was Novelis’ commentary, which was slightly negative as internal rates of return fell from double digits to high single digits,” Walekar said. “There will be an equity infusion of around $750 million from Hindalco to Novelis to keep Noveis balance sheet in good shape and keep its net debt to EBITDA below 3.5 times. The main purpose of this is to ensure that credit ratings remain stable. India’s balance sheet is very strong. At this point, they can easily generate aid to finance Novelis.”