Hindalco Industries Limited — Q3 FY25 earnings call

Call held 14 Feb 2025

Management summary

Hindalco Industries reported a robust Q3 FY25, with consolidated net profit after tax surging 60% YoY to Rs. 3,735 crores. This strong performance was primarily driven by its Indian aluminum and copper segments, which saw significant EBITDA growth. However, the Novelis segment experienced a 19% YoY decline in EBITDA to $367 million, impacted by high scrap prices and an unfavorable product mix. The company is actively pursuing strategic CAPEX projects in India and at Novelis, while maintaining a strong balance sheet with a consolidated net debt-to-EBITDA ratio of 1.33x.

Highlights

  • Consolidated Net Profit After Tax increased 60% YoY to Rs. 3,735 crores.

  • Hindalco India business reported a 69% YoY increase in EBITDA to Rs. 4,776 crores.

  • Indian Upstream Aluminum achieved a record quarterly EBITDA of Rs. 4,222 crores, up 73% YoY, with EBITDA per ton at $1,480 (up 68% YoY).

  • Indian Downstream Aluminum shipments grew 10% YoY to 99 Kt, contributing to a 36% YoY EBITDA increase to Rs. 150 crores.

  • The Copper business delivered strong performance with quarterly EBITDA up 18% YoY to Rs. 777 crores.

  • Consolidated Net Debt-to-EBITDA stood at a healthy 1.33x, lower than the corresponding period last year.

Concerns

  • Novelis quarterly EBITDA declined 19% YoY to $367 million, primarily due to high aluminum scrap prices and unfavorable product mix.

  • Novelis EBITDA per ton decreased 19% YoY to $406 from $499 in the prior year.

  • Indian aluminum-specific GHG emissions for 9M FY25 were 19.48 tons CO2 per ton aluminum, slightly higher than last year due to power plant disruptions.

  • LTIFR for the first nine months was 0.28, slightly higher than the same period last year due to increased project-related activities.

Key financials

  1. Consolidated Business Segment EBITDA ₹8,246 Cr +18%YoY
  2. Consolidated Reported EBITDA ₹8,100 Cr +28%YoY
  3. Consolidated Net Profit After Tax ₹3,735 Cr +60%YoY
  4. Hindalco India Business EBITDA ₹4,776 Cr +69%YoY
  5. Hindalco India Business Net Profit After Tax ₹2,885 Cr +134%YoY

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.

Segment breakdown

SegmentQuarterly EBITDAEBITDA per ton
Novelis367 Mn406 dollars
Hindalco India Upstream Aluminum4,222 Mn1,480 dollars
Indian Downstream Aluminum—179 dollars
Copper Business777 Mn—

Capital allocation

high confidence
  • Capex ₹8,000 Cr
    • Aditya alumina refinery (850 Kt) ₹7,500 Cr
    • 50 Kt copper recycling plant (Gujarat) ₹2,700 Cr
    • Bay Minette Project (Novelis) $4,100 Mn
    So the two projects that have already got EC and broken ground are the Aditya alumina refinery for 850 Kt in Odisha and the 50 Kt copper recycling plant in Gujarat. So the refinery is about Rs. 7,500 crores to Rs. 8,000 crores, the copper recycling plant is about Rs. 2,700 crores. So these have broken ground and FY '26-'27 you will see most of this CAPEX coming in. The two projects where we have now filed for environmental clearance is 180 Kt aluminum smelter expansion in Aditya, and the 300 Kt copper smelter expansion in Dahej. So these are the two projects. So what will happen is FY '26-'27-'28 is where all these CAPEXs will play out. FY '26 CAPEX should be around Rs. 8,000 crores, FY '27 it will go higher, '27-'28 will probably be at the peak.
  • Debt Gross ₹12,000 Cr · Net ₹41,818 Cr · 1.3× EBITDA
    • New borrowing Issued senior unsecured notes due 2030 by Novelis $750 Mn
    On the balance sheet side, our consolidated net debt stands at Rs. 41,818 crores. In Indian operations, we have a net cash of Rs. 1,952 crores, while Novelis' net debt stands at Rs. 44,716 crores at the end of December '24. Hindalco, at the consolidated level, continues to maintain a strong balance sheet with a net debt-to-EBITDA well below 2 times at 1.33 at the end of December 2024, which is lower than the corresponding period of the last year.
  • Liquidity Cash ₹1,952 Cr Indian operations have net cash of Rs. 1,952 crores, with Rs. 14,000 crores in treasury.
    In Indian operations, we have a net cash of Rs. 1,952 crores, while Novelis' net debt stands at Rs. 44,716 crores at the end of December '24. ... I think in nine months we have spent Rs. 4,400 crores. ... Yes, net cash, yes, because we have about Rs. 14,000 crores in treasury and Rs. 12,000 crores gross debt.

Guidance & targets

Renewable Energy

  • Total Renewable Energy Capacity Renewable Energy · H1 CY'25 · High confidence 300 MW
    We are set to add another 9 megawatts of solar and 100 megawatts of hybrid capacity with storage in the first half of calendar year '25. Post this, we are well aligned towards our target of reaching 300 megawatts of renewable capacity in the first half of calendar year '25.

    — Satish Pai

  • Hybrid Capacity (Solar & Wind) Renewable Energy · H2 FY'26 · High confidence 20 MW
    We are also developing another 20 megawatts hybrid capacity of solar and wind, which is expected to be operational in the second-half of FY '26.

    — Satish Pai

GHG Emissions

  • Aluminum-specific GHG Emissions GHG Emissions · Coming quarters · Medium confidence Improvement

    From 19.48 tons CO2 per ton aluminum today

    Our aluminum-specific GHG emissions in the first nine months of FY '25 were recorded at 19.48 tons of CO2 per ton of aluminum. This was a bit higher compared to the same period last year on account of higher power consumption at some of our smelters that were impacted by disruptions in the power plant. We expect this to settle down with improved efficiencies in the coming quarters.

    — Satish Pai

Coal Mining

  • Chakla Coal Mine Box Cut Coal Mining · Q3-Q4 CY'25 · High confidence Completed
    Chakla box cut still we should be doing this calendar year sometimes in Q3 to Q4. So Chakla is on track.

    — Satish Pai

  • Chakla Coal Mine Coal Production Start Coal Mining · Feb/Mar CY'26 · High confidence Start
    Calendar year '25, FY '26. So, we should be, say, in October, November we are planning for the opening of mine. So coal will start from, let's say, February, March of calendar year '26.

    — Satish Pai

  • Meenakshi Coal Mine Operational Coal Mining · FY'28 · Medium confidence Operational
    Meenakshi, we have just got allocated, so now we have to start the environmental clearance, forest clearance, so it will be about two years. But this mine is significantly crucial to Hindalco's long term coal pricing and security. ... Okay. So sir, Meenakshi would be more of FY '28 volume? Yes.

    — Satish Pai

Capex

  • India CAPEX Capex · FY26 · High confidence Rs. 8,000 crores
    FY '26 CAPEX should be around Rs. 8,000 crores, FY '27 it will go higher, '27-'28 will probably be at the peak.

    — Satish Pai

Volume

  • Indian Downstream Aluminum Capacity Volume · June CY'25 · High confidence 600 Kt

    From 400 Kt today

    So downstream is, Sumangal, quite significant because we were running at 400 Kt, so with Silvassa and the Aditya we will get to 600 Kt by sort of June of next year, calendar year '25.

    — Satish Pai

  • Alumina Sales Volume Volume · Q4 FY25 · High confidence 180-190 Kt

    From 165 Kt today

    Oh, the alumina sales. Alumina sales was 165 Kt in Q3, will be about 180 Kt to 190 Kt in Q4.

    — Satish Pai

Profitability

  • Quarterly Copper EBITDA Profitability · FY26 · High confidence Rs. 600 crores
    So our guidance would be that we expect next year the quarterly copper EBITDA to be around Rs. 600 crores, so that's how we would model it.

    — Satish Pai

  • Downstream Aluminum EBITDA per ton Profitability · Q4 FY25 · High confidence $200-210
    Yes, I think in Q4 we should be getting close to that number. And next year I am really bullish on the whole thing because the FRP 2A project will also commission, Silvassa will be ramping up quite well. So the $200 number we should be getting close to it in Q4, and next year we should be well into those numbers.

    — Satish Pai

Capacity

  • Alumina Refinery Expansion Commissioning Capacity · Dec '27 · High confidence Commissioned
    It is somewhere in December of '27. So, on the hedging I have just been corrected. The Rs. 700 crores gain was last year, this year in the first nine months the gain has been Rs. 90 crores. So

    — Satish Pai

  • Novelis Guthrie Auto Recycling Facility Capacity Capacity · Throughout 2026 · High confidence 240 Kt
    Yes. So as you know we are commissioning our auto recycling facility at Guthrie, Kentucky, that's underway and progressing. So that will increase the overall volumes throughout 2026 as we get to full capacity of 240 Kt.

    — Steve Fisher

What to watch in Q4 FY25

GHG Emissions Improvement

Coming quarters
Current 19.48 tons CO2 per ton aluminum (9M FY25)
Target Improved efficiencies

Why it matters

Tracking progress on environmental sustainability and operational efficiency, which impacts cost and regulatory compliance.

Our aluminum-specific GHG emissions in the first nine months of FY '25 were recorded at 19.48 tons of CO2 per ton of aluminum. This was a bit higher compared to the same period last year on account of higher power consumption at some of our smelters that were impacted by disruptions in the power plant. We expect this to settle down with improved efficiencies in the coming quarters.

Risks & concerns

  • High Aluminum Scrap Prices and Unfavorable Product Mix (Novelis)

    high

    Novelis's quarterly EBITDA was down 19% YoY due to high aluminum scrap prices and an unfavorable product mix, impacting EBITDA per ton.

    Novelis delivered a quarterly EBITDA of $367 million, down 19% year-on-year due to high aluminum scrap prices and unfavorable product mix. The resultant EBITDA per ton stood at $406 dollars versus $499 in the previous year same quarter, down 19% year-on-year.

    Management acknowledged

  • Higher GHG Emissions

    medium

    Aluminum-specific GHG emissions were higher in 9M FY25 (19.48 tons CO2/ton aluminum) compared to last year due to power plant disruptions, but expected to improve with efficiencies.

    Our aluminum-specific GHG emissions in the first nine months of FY '25 were recorded at 19.48 tons of CO2 per ton of aluminum. This was a bit higher compared to the same period last year on account of higher power consumption at some of our smelters that were impacted by disruptions in the power plant. We expect this to settle down with improved efficiencies in the coming quarters.

    Management acknowledged

  • Copper Concentrate TC/RC Pressure

    medium

    Concentrate TC/RCs remain under pressure with deficits expected in 2025, and Chinese smelters settling 2025 annual benchmark at 5.45 cents/pound (73% decline YoY).

    The concentrate TC/RCs remain under pressure due to continued deficits expected in 2025. Major Chinese smelters settled the 2025 annual TC/RC benchmark with large global miners at 5.45 cens per pound, representation a 73% year-on-year decline from 20.5 cents per pound in 2024.

    Management acknowledged

  • Global Economic Headwinds

    medium

    Outlook tempered by fragmented and protectionist trading environment, inward-looking policies, geopolitical risk, and potential inflation.

    However, the outlook is tempered by fragmented and protectionist trading environment and inward-looking policies, which may dampen economic activity and drive inflation up with repercussions for emerging economies. Monetary policy easing, therefore, will be carefully calibrated to ensure inflationary pressures are durably continued.

    Management acknowledged

  • Increased LTIFR

    low

    LTIFR for 9M FY25 was 0.28, slightly higher than last year due to increased project-related activities.

    Our LTIFR in the first nine months stood at 0.28, slightly higher than the same period last year due to increased project related activities.

    Management acknowledged

Q&A highlights

4 direct
Captive Coal Mine Timelines and Cost Impact Direct
Chakla box cut still we should be doing this calendar year sometimes in Q3 to Q4. So Chakla is on track. Meenakshi, we have just got allocated, so now we have to start the environmental clearance, forest clearance, so it will be about two years. But this mine is significantly crucial to Hindalco's long term coal pricing and security. ... Meenakshi coming in would reduce those coal prices from current levels by up to 30%.

Provides clarity on the timelines for key captive coal mines and their expected impact on cost reduction, which is a critical driver for profitability.

Asked by Sumangal Nevatia

India CAPEX Plans and Phasing Direct
So the two projects that have already got EC and broken ground are the Aditya alumina refinery for 850 Kt in Odisha and the 50 Kt copper recycling plant in Gujarat. So the refinery is about Rs. 7,500 crores to Rs. 8,000 crores, the copper recycling plant is about Rs. 2,700 crores. ... FY '26 CAPEX should be around Rs. 8,000 crores, FY '27 it will go higher, '27-'28 will probably be at the peak.

Details the significant CAPEX plans for India, including specific project costs and the expected phasing of expenditures over the next few fiscal years, indicating future growth drivers.

Asked by Sumangal Nevatia

Novelis US Import Duties Exemption Confidence Partial
Yes. So first of all, it's very early stage as it relates to where these tariffs will ultimately settle out, both what the US has done to-date and what other countries might do. But the historical precedence that we have seen of getting exemptions as we have imported to support our project abatement has been positive. We think we are doing exactly what the US government wants in domesticating supply chain and in building the downstream facility in the US with employment to supply the beverage packaging and automotive markets.

Addresses a key regulatory uncertainty for Novelis, with management expressing confidence based on historical precedence and alignment with US policy goals, though acknowledging the early stage.

Asked by Ashish Jain

Novelis Cumulative CAPEX Breakdown Direct
So basically if you consider that we have as on date spent about $1.3 billion when it comes to the Bay Minette CAPEX, we still have around $2.8 billion to go. And that is going to happen a little bit in the fourth quarter, but most of it will come in the next two years. So, let's say, it's somewhere in the range of about $1.4 billion is that itself, maybe a little less because this quarter we will spend some more. And then $300 million to $350 million is maintenance CAPEX. And then there are other ongoing improvement projects, the debottlenecking projects which are in the pipeline for which cash still has to go out.

Provides a detailed breakdown of Novelis's $6 billion cumulative CAPEX, clarifying the allocation between strategic projects like Bay Minette, maintenance, and other ongoing improvement initiatives.

Asked by Pathanjali Srinivasan

Novelis Scrap Price Outlook and Margin Impact Direct
Yes, sure. So, I mean, in the short and medium term, it is hard to predict. As we said on our call earlier in the week, we do think that the overall scrap pricing in the market is starting to peak out. Now, how much it moderates back in the short term, medium term is hard for us to predict. We do think that we will be at new levels, higher levels of scrap pricing on a longer term basis.

Addresses the critical factor impacting Novelis's margins, providing management's view that scrap prices may be peaking but will remain at higher levels long-term, and outlining internal mitigation strategies.

Asked by Somaiah V.

Alumina Price Movement and Sales Basis Partial
Q2 to Q3, I think it followed the index. I think the index was around $375 in Q2 and the index has been around $700 in Q3. So that broadly should tell you the pricing. And as I was saying, currently in January, February it's running at $500. ... No, no. Quite a lot of it is on a contract basis, and some parts of it have even got linkage to LME. So you are absolutely right, unlike NALCO or something, we do not have the full advantage of the index.

Clarifies the alumina price trends and the company's sales strategy (mix of contract and LME-linked), explaining why it doesn't fully capture index movements, which is key for understanding upstream profitability.

Asked by Ashish Kejriwal

3 min read 5 chapters

Detailed narrative

Strong Performance in Indian Operations Drives Consolidated Growth

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 Faces Headwinds from Scrap Prices and Product Mix

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.

Strategic CAPEX and Capacity Expansion Underway

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.

Focus on Sustainability and Resource Securitization

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.

Healthy Balance Sheet and Hedging Strategy

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.

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