Hindalco share price falls over 6% after Novelis Q2 results; sees $650 million impact from fire at US plant

Hindalco share price declined over 6% in early trade on Thursday after the company’s subsidiary Novelis Inc reported its earnings for the second quarter of FY26. Hindalco shares slumped as much as 6.36% to ₹778.10 apiece on the BSE.

Novelis Inc, the wholly-owned arm of Hindalco Industries Ltd, reported a 26.3% increase in consolidated net income to $163 million for the second quarter ended September 30, 2025. The company had posted a consolidated net income of $129 million in the corresponding quarter of the previous fiscal year.

Net income was primarily driven by favorable metal price lag resulting from rising average local market aluminum premiums, as well as lower charges associated with the prior year Sierre flood, partially offset by lower operating performance.

However, the company’s net income in Q2 excluding special items declined 37% year-on-year (YoY) to $113 million.

Net sales rose 10.45% to $4,744 million from $4,295 million, YoY, mainly driven by higher average aluminum prices.

Total rolled product shipments of 941 kilotonnes were in line with the prior year period. Slightly higher automotive and aerospace shipments were offset by lower beverage packaging and specialty shipments, Novelis said in a release.

Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) decreased 9% to $422 million in the second quarter. Adjusted EBITDA per tonne shipped was down 8% YoY to $448.

Novelis had a net leverage ratio (Adjusted Net Debt / trailing twelve months (TTM) Adjusted EBITDA) of 3.5x at the end of the second quarter of fiscal year 2026.

Impact of Fire at Oswego Plant

Novelis said it expects the free cash flow for the current financial year to be negatively impacted by $550-650 million due to the fire incident at its plant in New York in September. This includes a $100-150 million impact in adjusted EBITDA, according to a regulatory filing.

However, it estimates 70% to 80% of that could be recoverable in the next financial year through insurance.

Hindalco said that extensive restoration efforts have been taken at the fire-hit plant to return to normalcy.

“The Hot Mill is expected to restart by end-December 2025, followed by a 4-6 week of production ramp-up,” Hindalco Industries said in a regulatory filing on November 5.

In September the company had said the production at its plant in New York had been halted following a fire accident.

The plant is insured for property damage and business interruption losses related to such events, subject to deductibles and policy limits, the company had said.

Should you buy, sell or hold Hindalco shares?

Brokerage firm Nuvama Institutional Equities said Novelis posted weak Q2 results, but in-line adjusted EBITDA of $422 million, up 1.4% QoQ and EBITDA per tonne of $448, up 4% QoQ during Q2FY26. It noted that the net tariff impact was $54 million in Q2FY26, while Capex on the upcoming 0.6 mtpa Bay Minette project was increased 22% to $5 billion.

“Further inflation in capex, adverse effect of fire at the Oswego plant and likely future volume loss to competitors are negatives. Though we are cutting FY26E and FY27E EBITDA estimates of Novelis by 10% and 6%, consolidated EBITDA estimates have been increased by 2% and 6%, factoring in higher aluminium prices ($2,700 per tonne versus $2,500 earlier),” Nuvama said.

Nuvama downgraded its ratings on Hindalco Industries shares to ‘Hold’, but raised target price on the stock to ₹838 from ₹757 earlier, at 6x EV/EBITDA.

At 9:40 AM, Hindalco share price traded 4.84% lower at ₹790.75 apiece on the BSE.

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