Hindalco Industries Ltd’s reported consolidated net profit for the March quarter (Q4FY26) has halved year-on-year to ₹2,597 crore, weighed down by exceptionals. However, the outlook remains strong, thanks to the steep rise in aluminium and copper prices and the anticipated restart of subsidiary Novelis’ Oswego plant in June. This, along with expected cost savings, has prompted brokerages to revise their medium-term earnings estimates upwards.
For instance, JM Financial Institutional Securities has revised its FY27 and FY28 estimated earnings upwards by 8.6% and 7.6%, respectively, given expectations that aluminium London Metal Exchange (LME) prices will remain above $3,500 per tonne.
The global aluminium market is experiencing a massive supply deficit amid production disruptions at facilities across West Asia. The region forms 8-9% of global production. The deficit is projected to reach about 1.5 million tonnes (mt) in 2026, against 0.3 mt before the war began.
In this backdrop, the average LME aluminium price increased 22% year-on-year in Q4FY26 to $3,195 a tonne. The FY26 average price was $2,772 a tonne. Prices have risen further to over $3,600 a tonne in Q1FY27 till date, improving Hindalco’s earnings prospects, partly offset by about 5% increase in cost of production, mainly due to higher fuel prices.
In fact, higher realizations of aluminium and copper have helped Hindalco clock 20% year-on-year revenue growth to ₹78,200 crore. Growth was also aided by higher domestic aluminium shipments. Domestic aluminium demand rose by about 9% in Q4FY26, driven by strong momentum in automobiles & electric goods.
Novelis accounted for about 55% of consolidated revenue but a lower share of about 40% in total Ebitda.
However, Ebitda grew at a much slower pace of 6% to ₹10,200 crore, impacted by higher raw material costs. While the India business posted Ebitda growth of 14% to ₹6,086 crore, the metric for Novelis declined by about 3% to $459 million.
In comparison, Vedanta recorded revenue and Ebitda growth of 29% and 59% in Q4, led by the surge in silver prices.
Novelis: fires, tariffs, and the road to recovery
Although Novelis Ebitda was up 5%, excluding the impact of fires at Oswego, tariffs, and insurance recoveries. Various cost-reduction initiatives meant Ebitda per tonne was up 10% to $543. Novelis generated savings of over $125 million in FY26 through these measures, and aims to save a total of $350-400 million by FY28, to reach its target of $600 per tonne of Ebitda.
The expected resumption of Oswego production in June should boost Hindalco Q2FY27 onwards. The plant was hit by two fires last year, leading to a loss of $1.7 billion (about ₹15,000 crore), up from initial estimates of $1.3-1.6 billion, due to higher repair, logistics, and third-party sourcing to maintain business continuity. The management is confident that it will recover about 70-75% of this back from insurance cover, in FY27-28.
The fires and capital expenditure of ₹32,000 crore has increased Hindalco’s consolidated net debt sharply to ₹64,800 crore in FY26 from ₹35,300 crore in FY25. The management expects this to peak at ₹80,000-90,000 crore in FY27, and to reduce thereafter with the commissioning of Novelis’ 0.6 million tonnes per annum plant at Bay Minette in H2FY27. The commissioning should help Novelis, which accounts for about ₹63,000 crore of net debt, turn free cash flow positive by FY27-end.
Hindalco’s shares hit a new high of ₹1,119.80 apiece on Monday. Investors have seen handsome gains recently, given the uptick in commodity prices. “Following the 20% rally (versus 8.4% for Nifty Metals) in the stock since the onset of the US-Iran conflict, valuations appear relatively demanding,” said Emkay Global Financial Services. Thus, it has downgraded the stock to ‘Add’ rating from ‘Buy,’ while increasing its target price to ₹1,200 from ₹1,100.