Hindalco Industries Limited — Q1 FY26 earnings call

Call held 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

  • 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

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

  • Elevated scrap prices compressing Novelis margins

Key financials

  1. Consolidated Segment EBITDA ₹8,539 Cr 0%YoY
  2. Consolidated PAT ₹4,004 Cr +30%YoY
  3. India Business EBITDA ₹4,982 Cr +13%YoY
  4. India Business PAT ₹2,847 Cr +45%YoY
  5. India Upstream Al EBITDA ₹4,080 Cr +17%YoY
  6. India Upstream Al EBITDA/ton 1,467 $/ton +15%YoY
  7. India Upstream Al EBITDA Margin 44%
  8. India Downstream Al EBITDA ₹229 Cr +108%YoY
  9. India Downstream Al EBITDA/ton 264 $/ton +92%YoY
  10. India Downstream Al Shipments 101 Kt +6%YoY
  11. Copper EBITDA ₹673 Cr -16%YoY
  12. Copper Shipments 124 Kt +4%YoY
  13. Novelis Shipments 963 Kt +1%YoY
  14. Novelis EBITDA 416 $M -17%YoY
  15. Novelis EBITDA/ton 432 $/ton -18%YoY
  16. Consolidated Net Debt ₹34,257 Cr
  17. Consolidated Net Leverage 1.02×
  18. India Net Cash ₹18,657 Cr
  19. India Q1 Capex ₹1,273 Cr
  20. Renewable Energy Capacity 189 MW

What they filed

Q1 FY27: revenue up 32.1%, net profit up 75.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue58,203 58,390 64,890 64,232 66,058 +13%66,521 +14%78,133 +20%84,825 +32%
EBITDA7,883 7,583 8,836 7,906 8,966 +14%7,991 +5%10,014 +13%13,932 +76%
Net profit3,909 3,735 5,284 4,004 4,741 +21%2,049 −45%2,597 −51%7,013 +75%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Guidance & targets

Cost

  • Novelis FY26 Exit Cost Savings Cost · FY26 exit · High confidence >$100M (raised from $75M)

    Previously $75M → >$100M (raised from $75M)

    we have now raised our FY '26 exit savings target to over $100 million, up from the earlier estimate of $75 million

    — Satish Pai

  • Captive Coal Cost Savings Cost · When fully ramped · Medium confidence ~30% reduction vs linkage
    when all our captive mines come on, we should get about a 30% reduction in the cost level

    — Satish Pai

Profitability

  • Novelis EBITDA/ton Anchor Profitability · Medium-term · High confidence $600/ton
    our anchor is $600 per ton, and our confidence level that we have all the actions in place to get there is very high

    — Dev Ahuja

  • Copper Quarterly EBITDA Profitability · Quarterly · Medium confidence ~INR 600 crores
    the INR600 crore guidance still holds

    — Satish Pai

Capex

  • India Capex FY26 Capex · FY26 · High confidence INR 7,500-8,000 crores
    Guidance for the full year is about INR7,500 crores to INR8,000 crores

    — Satish Pai

  • India Capex FY27 Capex · FY27 · Medium confidence ~INR 15,000 crores
    Next year, we'll be around INR15,000 crores

    — Satish Pai

Growth

  • India Downstream EBITDA/ton Target Growth · FY26-27 · Medium confidence $250-$300
    I think that it will be between $250 and $300

    — Satish Pai

Operations

  • India Aditya FRP Volumes FY26 Operations · FY26 · Medium confidence ~70 Kt
    this year, we are targeting roughly 70 Kt

    — Satish Pai

Risks & concerns

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

    high

    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

  • Elevated scrap prices compressing Novelis margins

    high

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

    Both acknowledged

  • Copper TC/RC collapse — 73% benchmark decline

    medium

    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

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

    medium

    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

  • Renewable energy projects running late in India

    low

    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

Areas of evasion (1)

  • Specific coal mine cost savings per mine

Q&A highlights

4 direct
India downstream EBITDA trajectory Direct
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)

Novelis tariff mitigation vs cost takeout distinction Direct
our tariff mitigation actions are absolutely distinct and over and above the cost takeout plan... we are capacity constrained in the U.S., which is forcing us to have more inter-region movement

Clarifies tariff mitigation is separate from $300M cost reduction — addresses analyst confusion

Asked by Rajesh Majumdar (B&K Securities)

Captive coal mines timeline and impact Direct
The 3 mines put together roughly will give us around 20 million tons of coal when they are running fully... 30% reduction in cost level

Major structural cost advantage from captive coal — 20 MT capacity with 30% cost savings vs linkage

Asked by Sumangal (Kotak)

Copper recycling as TC/RC mitigation Direct
margins are 2x to 3x of the smelting business... IRRs on these projects are higher than mid-teens

Copper recycling at mid-teen IRRs with 2-3x smelting margins — structural solution to TC/RC pressure

Asked by Ritesh Shah (Investec)

1 min read 3 chapters

Detailed narrative

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.

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.

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.

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