Hindalco Industries Limited

Hindalco's Indian operations delivered robust results in Q3 FY25, with the overall reported EBITDA for the India business increasing 69% YoY to Rs. 4,776 crores. This strong performance translated into a 134% YoY rise in Net Profit After Tax to Rs. 2,885 crores for the Indian segment. The Indian upstream aluminum business achieved a record quarterly EBITDA of Rs. 4,222 crores, up 73% YoY, primarily due to low input costs and favorable macros, with EBITDA per ton reaching $1,480, a 68% YoY increase. The Indian downstream aluminum business also saw shipments grow 10% YoY to 99 Kt, leading to a 36% YoY EBITDA increase to Rs. 150 crores.

Novelis's performance in Q3 FY25 was impacted by challenging market conditions. Shipments were marginally down 1% YoY at 904 Kt compared to 910 Kt in the prior year. Quarterly EBITDA for Novelis decreased 19% YoY to $367 million, and EBITDA per ton also fell 19% YoY to $406 from $499. This decline was attributed to high aluminum scrap prices and an unfavorable product mix. Management indicated that scrap pricing is starting to peak out, and new contracts with higher prices effective January 1 are expected to provide a meaningful upside in Q4 FY25.

Hindalco is executing a significant CAPEX program in India and at Novelis. The company plans to spend around Rs. 8,000 crores in India for FY26, with major projects including the Aditya alumina refinery (850 Kt) costing Rs. 7,500-8,000 crores and a 50 Kt copper recycling plant in Gujarat costing Rs. 2,700 crores, both of which have broken ground. For Novelis, the cumulative CAPEX over FY25-27 is projected at $6 billion, with approximately $2.8 billion remaining for the Bay Minette project. The company aims to increase its Indian downstream aluminum capacity from 400 Kt to 600 Kt by June CY'25.

The company continues its strong focus on ESG initiatives, achieving a top 1% ranking in the S&P Global Sustainability Yearbook 2025. Key achievements include recycling 79% of total waste and 109% of bauxite residue in the first nine months, along with 16 of 19 sites meeting Zero Liquid Discharge standards. Hindalco is expanding its renewable energy footprint, targeting 300 MW of capacity by H1 CY'25. Resource securitization efforts are also progressing, with the Meenakshi coal mine (12 million tons/annum capacity) secured, expected to reduce coal prices by up to 30% once operational by FY28.

Hindalco maintains a strong balance sheet, with consolidated net debt standing at Rs. 41,818 crores and a net debt-to-EBITDA ratio of 1.33x at the end of December 2024, which is lower than the previous year. Indian operations hold a net cash position of Rs. 1,952 crores. The company employs a hedging strategy for its Indian aluminum business, with 35% of Q4 FY25 commodity hedged at $2,600/ton and 16% of currency hedged at Rs. 88. For the next year, 12% of commodity is hedged at $2,700/ton and 13% of currency at Rs. 87.33/dollar.