Hindalco profit slumps on heat from Novelis fire
Two separate fires at its American subsidiary Novelis put pressure on Hindalco Industries Ltd’s annual performance; The company’s FY26 earnings fell short of Street expectations despite higher metal prices.
Aditya Birla Group’s flagship reported an almost 16% decline in net profit attributable to owners. ₹13,391 crore ₹16,001 crore in FY25. Profit was well below expectations ₹16,164 crore estimated Bloomberg Survey conducted with the participation of 28 analysts. In the fourth quarter, the company saw a 51% decline in net profit attributable to owners. ₹2,597 crore, downwards ₹5,283 crore a year ago.
The decline was mainly due to: ₹6,963 crore in one-time expenses linked to the disruption of the Oswego plant in New York last year. The operations of Novelis, a major supplier of rolled aluminum to canned food manufacturers and automobile companies, were affected by the fire.
Novelis accounted for 59% of Hindalco’s revenue in FY26. Hindalco reports 15% increase in consolidated revenue from operations ₹2,74,944 crore on the back of rising aluminum sales and moderate copper sales in the domestic market.
“We view the outage as largely a timing-related impact, with headwinds in the current year expected to improve significantly in the next fiscal year,” chief executive Satish Pai said in a post-earnings call discussing the fire accident.
Company reports business EBITDA record in India ₹22,671 crore in FY26, a 6% increase over FY25. However, Novelis saw EBITDA fall by 5%. ₹14,546 crore in FY26 as fire incident volumes shrank.
In the June quarter, Hindalco expects input cost increases of around 5% in the short term due to the West Asian war. However, analysts expect higher metal prices to cushion the impact.
“Earnings were heavily impacted by a one-off fire incident at Novelis’ Oswego plant. Management has guided for a $1.7 billion restructuring charge that will weigh on free cash flow, but 70-80% is expected to be recouped through insurance, limiting the long-term financial impact. With the restart of the Oswego plant, the company appears on track for a gradual recovery,” said Aditya Welekar, metals and mining analyst at Axis. mining analyst Aditya Welekar Securities.
In India, aluminum cost pressures are expected to increase in the first quarter due to blast furnace oil and coal tar prices, although realizations remain solid. Welekar said the near-term outlook remains stable as strong aluminum and copper prices offset cost pressures and operations gradually stabilize.
The Mumbai-based company is also planning a ₹12,000 crore capex in India for FY27, while Novelis’ capex will be $2.3-2.4 billion, mostly in Bay Minette. Bay Minette, Novelis Inc. It is the site of a new $5.5 billion low-carbon aluminum recycling and rolling facility being built by A.Ş. and expected to be completed this year.
Going into FY28, Pai said it’s fair to say Novelis’ capex will drop sharply once Bay Minette comes into service and will engage more in maintenance capex; but Indian capex will be much higher than that ₹12,000 crore due to increases in copper smelter and other projects.
Hindalco saw a mixed trend in volumes across segments in FY26 compared to the previous year. In FY26, Novelis shipments decreased to 3,557 kt from 3,757 kt in FY25, reflecting the impact of the Oswego plant disruption. Similarly, the copper business also reported a marginal decline of 1% in volume; metal sales stood at 487 kt compared to 491 kt a year ago. In contrast, aluminum upstream operations improved modestly; shipments increased to 1,350 kt from 1,327 kt in FY25 and aftermarket shipments increased by 11% to 446 kt, supported by stable operational performance and capacity utilization.
