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    Hindalco Inds.

    HINDALCONeutral
    Metals & Mining·12 Aug 2025
    Management Summary

    Hindalco's India business delivered exceptional results with lowest-in-15-quarters cost of production in upstream aluminium and record downstream EBITDA. Novelis was the drag with EBITDA/ton dropping 18% YoY due to elevated scrap prices and tariff headwinds, though management outlined clear mitigation plans. The US tariff impact was quantified at $60M/quarter with production relocation underway. Key capex projects progressing — alumina refinery, copper recycling on track for FY27, Aditya smelter Phase 1 orders being placed. Consolidated leverage at comfortable 1.02x.

    Highlights

    10

    • Consolidated segment EBITDA flat YoY at INR 8,539 crores; PAT up 30% YoY at INR 4,004 crores

    • India business EBITDA up 13% YoY at INR 4,982 crores; PAT up 45% YoY at INR 2,847 crores

    • India upstream Al EBITDA up 17% YoY at INR 4,080 crores; EBITDA/ton $1,467 at 44% margin — global best; COP lowest in 15 quarters

    • India downstream Al record EBITDA INR 229 crores up 108% YoY; EBITDA/ton record $264

    • Copper EBITDA INR 673 crores down 16% YoY due to TC/RC collapse; guidance of INR 600 crores/quarter maintained

    • Novelis shipments 963 Kt (+1% YoY); EBITDA $416M ($432/ton, down 18% YoY) — impacted by scrap prices and tariffs

    • Net tariff impact guided at $60M/quarter; FY26 exit cost savings target raised to >$100M from $75M

    • Consolidated net leverage at 1.02x; India net cash INR 18,657 crores

    • AluChem acquisition ($125M EV) for specialty alumina technology access

    • India capex: INR 7,500-8,000 crores FY26, ~INR 15,000 crores FY27

    Concerns

    2

    • US tariff impact on Novelis — $60M/quarter drag

    • Elevated scrap prices compressing Novelis margins

    What Changed4

    vs Q3 FY26

    Tone shiftCautiously Optimistic → Confident on India business fundamentals, pragmatic about Novelis headwinds with clear action plans. Transparent about challenges.Guidance items10 → 8 (-2)Risks discussed8 → 5 (-3)Q&A highlights8 → 4 (-4)

    Key financials

    Single quarter

    20 metrics
    1. 01Consolidated Segment EBITDA₹8,539 Cr0%YoY
    2. 02Consolidated PAT₹4,004 Cr+30%YoY
    3. 03India Business EBITDA₹4,982 Cr+13%YoY
    4. 04India Business PAT₹2,847 Cr+45%YoY
    5. 05India Upstream Al EBITDA₹4,080 Cr+17%YoY

    Guidance & targets

    8
    CategoryTargetPriority
    Cost
    Novelis FY26 Exit Cost Savings
    >$100M (raised from $75M)
    		High
    Cost
    Captive Coal Cost Savings
    ~30% reduction vs linkage
    		Medium
    Profitability
    Novelis EBITDA/ton Anchor
    $600/ton
    		High
    Profitability
    Copper Quarterly EBITDA
    ~INR 600 crores
    		Medium
    Capex
    India Capex FY26
    INR 7,500-8,000 crores
    		High
    Capex
    India Capex FY27
    ~INR 15,000 crores
    		Medium
    Growth
    India Downstream EBITDA/ton Target
    $250-$300
    		Medium
    Operations
    India Aditya FRP Volumes FY26
    ~70 Kt
    		Medium

    Risks & concerns

    6
    RiskSeverity

    US tariff impact on Novelis — $60M/quarter drag

    Net tariff impact at $60M/quarter from 50% 232 tariffs. ~170 Kt shipped from Korea/South America + ~90 Kt from Canada into US. Mitigation through US production relocation underway. — Both acknowledged

    high

    Elevated scrap prices compressing Novelis margins

    Novelis EBITDA/ton dropped to $432 from $525 YoY. Scrap prices elevated though improving. Full Midwest premium benefit yet to flow through. — Both acknowledged

    high

    Copper TC/RC collapse — 73% benchmark decline

    CY25 benchmark at $0.054/lb vs $0.205/lb in CY24. Expected to remain subdued for next couple of years. Mitigated by byproducts and downstream value addition. — Management acknowledged

    medium

    Heavy capex cycle — India FY27 peak at INR 15,000 crores

    India capex rising from INR 7,500-8,000 crores to INR 15,000 crores in FY27. Multiple mega-projects concurrent. Will phase some projects to manage leverage. — Analyst acknowledged

    medium

    Renewable energy projects running late in India

    100 MW RTC renewable delayed from June to Oct-Nov due to grid connectivity approval delays. Management won't slow expansion for renewable targets. — Management acknowledged

    low

    Areas of Evasion(1)

    • Specific coal mine cost savings per mine

    Q&A highlights

    4

    “instead of just selling extrusions, are now selling battery enclosures to EV manufacturers... EBITDA per ton target between $250 and $300”

    Downstream premiumization through value-added products like battery enclosures driving 108% EBITDA growth

    asked by Amit Murarka (Axis Capital)

    1 min read3 chapters

    Detailed Narrative

    01

    India Business — Cost Leadership and Downstream Breakout

    India upstream aluminium achieved lowest COP in 15 quarters (down 3% QoQ) thanks to 63% linkage coal availability. EBITDA/ton at $1,467 with 44% margins. Downstream EBITDA doubled to INR 229 crores with EBITDA/ton at record $264, driven by battery enclosures and premiumization. Target $250-300/ton as Aditya FRP ramps (targeting 70 Kt FY26, capacity to 600 Kt). India in net cash position of INR 18,657 crores.

    02

    Novelis — Tariff Headwinds with Clear Recovery Path

    Novelis EBITDA dropped 17% YoY to $416M ($432/ton) due to elevated scrap prices and tariff impact. Net tariff impact guided at $60M/quarter. ~260 Kt shipped into US from Canada/Korea/LatAm faces 50% 232 tariffs. Mitigation through US production relocation is separate from $300M structural cost reduction program. FY26 exit savings raised to >$100M. Scrap spreads improving but full Midwest premium benefit ($1,500) yet to flow. Anchor target of $600/ton EBITDA maintained with high confidence.

    03

    Capex and Expansion Pipeline

    India capex: INR 7,500-8,000 crores FY26, peaking at ~INR 15,000 crores FY27. Key projects: Alumina refinery and copper recycling (orders placed, FY27 completion), Aditya smelter 180-pot Phase 1 (orders being placed, FY28), Chakla/Bandha coal mines (box cuts this year, commercial FY27). AluChem acquisition ($125M) for specialty alumina technology. Total captive coal capacity of 20 MT when fully ramped, enabling 30% cost reduction vs linkage.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.