Hindalco Industries Limited — Q3 FY26 earnings call

Call held 12 Feb 2026

Management summary

Hindalco reported a mixed Q3 FY26, with strong performance from its India businesses, particularly in Aluminum Upstream and Downstream, driving a 6% consolidated EBITDA growth. However, consolidated PAT was significantly impacted by exceptional items related to the Novelis Oswego plant fires. Novelis showed robust underlying EBITDA per ton growth despite the Oswego challenges, and the company remains committed to its strategic growth projects and debt management, aiming to keep consolidated net debt to EBITDA around 2x.

Highlights

  • Consolidated business segment EBITDA increased 6% year-on-year to INR 8,762 crores.

  • Hindalco India business EBITDA rose 10% year-on-year to INR 5,660 crores, achieving a record PAT of INR 3,581 crores, up 24% year-on-year.

  • India Upstream Aluminum delivered an EBITDA of $1,572 per ton with 45% margins, maintaining a global industry-leading position.

  • India Downstream Aluminum shipments grew 9% year-on-year to 108 Kt, with EBITDA up 55% year-on-year to INR 233 crores.

  • Novelis adjusted EBITDA reached $436 million, or $495 per ton, a 22% year-on-year increase (excluding Oswego fire and tariff impacts).

  • Novelis's cost efficiency initiatives run rate increased to $150 million, up from a target of $75 million.

  • Consolidated net debt to EBITDA stood at 1.73x at the end of December 2025, well below the 2x target.

Concerns

  • Consolidated PAT was down 45% year-on-year to INR 2,049 crores, primarily due to exceptional items including the Novelis Oswego plant fires.

  • Copper business EBITDA decreased 23% year-on-year to INR 595 crores, impacted by lower TC/RCs and concentrate mix.

  • The Chakla mine box cut is delayed by approximately one quarter, now expected in April.

  • Novelis's net debt to EBITDA ratio is expected to temporarily increase to the 'high 4s'.

  • Novelis expects a Q4 volume impact of approximately 70 Kt due to the Oswego outage.

Key financials

  1. Consolidated EBITDA ₹8,762 Cr +6%YoY
  2. Consolidated PAT ₹2,049 Cr -45%YoY
  3. Consolidated Adjusted PAT ₹4,051 Cr +8%YoY
  4. Hindalco India EBITDA ₹5,660 Cr +10%YoY
  5. Hindalco India PAT ₹3,581 Cr +24%YoY
  6. Novelis Adjusted EBITDA 436 Mn

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

  • India Upstream Aluminum
    2% Shipments Growth6% Revenue Growth₹4,832 Cr EBITDA1,572 USD EBITDA per ton45% EBITDA Margins
  • India Downstream Aluminum
    108 Kt Shipments₹233 Cr EBITDA241 USD EBITDA per ton
  • Copper Business
    122 Kt Metal Shipments82 Kt CCR Volumes₹595 Cr EBITDA
  • Novelis
    881 Kt Shipments (adjusted for Oswego)495 USD Adjusted EBITDA per ton

Capital allocation

high confidence
  • Capex ₹10,000 Cr
    • India CAPEX (including Bandha Mine acquisition) ₹10,000 Cr
    • Novelis Bay Minette project cost (revised) $5 Bn
    So, this year, our target is about, we will be finishing the year at around INR 8,000 crores, and you need to add to that the INR 2,000 crores we paid to get the Bandha Mine. So, roughly this year will be INR 10,000 crores, and next year we also will be in the same range, about INR 10,000 crores to INR 12,000 crores, because the Aditya Refinery recycling plant projects will be going. So, that is the next year's forecast as well. (Page 19) / So, the way, Pinakin and we are looking at that, and that is why in the prepared remarks, we are sticking to our commitment of 2 or below at a consol net debt to EBITDA level. And I think that that is the only way I can answer, because the Novelis CAPEX is largely Bay Minette. After that, they are going to go on a deleveraging cycle. (Page 12-13) / But I don't want you to kind of think that just because we are at $2.7 billion, there is some slowness in the project versus the projected cost of around $5 billion. Not at all. (Page 13)
  • Debt Net cash ₹600 Cr · 1.7× EBITDA Cost 5.3% · Maturity: Most of Novelis's debt maturities are towards the end of the decade, with no early maturities.
    • New borrowing AV Minerals raised $800 million at SOFR plus 105 bps. $800 Mn
    • New borrowing AV Minerals upsized facility by $200 million at same pricing. $200 Mn
    • New borrowing $750 million infused into Novelis as equity in December 2025. $750 Mn
    • New borrowing Additional $200 million will be infused into Novelis as equity during the current quarter. $200 Mn
    Hindalco, at the consolidated level, continues to maintain a strong balance sheet with net debt to EBITDA well below 2x at 1.73 at the end of December 2025. (Page 8) / India is a negative 4,000. You are talking about gross or net? Because net in India is negative now. So, negative INR 600 crores. (Page 20) / So, the cost of capital of Novelis is in the mid-8s. (Page 19) / The cost of debt, the weighted average cost of debt would be somewhere around 5.3%. (Page 19) / Well, most of it is towards the end of the decade. We have no early maturities. (Page 20)
  • Liquidity Liquidity disclosed Management indicated that the $950 million equity infusion into Novelis is for funding the increased Bay Minette cost and bridging the Oswego impact, with confidence in the 5-year tenure for return.
    So, we are looking at $750 million and potentially another $200 million of equity infusion. Now, what is the thinking, rationale, logic around it? Essentially, this is going to go towards funding the announced higher cost of Bay Minette, i.e., from $4.1 billion to around $5 billion. That is essentially the logic behind infusing this equity between us and our parent. We agreed that it is not good to go into the debt market to fund this increase. (Page 17)

Guidance & targets

Capacity

  • Renewable Energy Capacity Capacity · end FY26 · High confidence 522 Megawatts
    At the end of this quarter, our renewable energy capacity was at 418 Megawatts, powered by solar, wind, and hydel resources. We are on track to adding another 103 Megawatts in the following quarter and are well advanced in our round-the-clock renewable energy initiatives, with 130 Megawatts of storage-based power to be deployed this year, taking our renewable capacity to 522 Megawatts by the end of this financial year.

    — Satish Pai

Profitability

  • Novelis Long-term EBITDA per ton Profitability · long-term · High confidence $600
    Our long-term guidance of $600 per ton remains intact as we advance on accelerated pace in our $300 million structural cost reduction program, driving sustained improvements in operational efficiency and margins.

    — Satish Pai

  • India Downstream EBITDA Profitability · by FY30 · High confidence fourfold increase
    Our strategic priorities are clearly defined, accelerating capacity expansion across the aluminum and copper upstream businesses, while driving a fourfold increase in downstream EBITDA in India by FY '30.

    — Satish Pai

  • Copper EBITDA Profitability · Q4 · High confidence INR 600 crore
    The demand is very strong, and the EBITDA guidance of INR 600 crore is completely comfortable in Q4.

    — Satish Pai

Cost Reduction

  • Novelis Structural Cost Reduction Program Cost Reduction · FY28 exit · High confidence $300 million
    Looking ahead, we remain committed to our 3-year goal of permanently reducing our cost structure by $300 million by FY '28 exit.

    — Satish Pai

Project Completion

  • Novelis Bay Minette Facility Completion Project Completion · FY26 · High confidence completion this year
    Our Bay Minette 600 Kt greenfield rolling and recycling facility is scheduled for completion this year to meet growing customer demand for automotive, beverage packaging, and aluminum specialty products.

    — Satish Pai

Capex

  • India CAPEX Capex · FY26 · High confidence INR 10,000 crores
    So, this year, our target is about, we will be finishing the year at around INR 8,000 crores, and you need to add to that the INR 2,000 crores we paid to get the Bandha Mine. So, roughly this year will be INR 10,000 crores...

    — Satish Pai

  • India CAPEX Capex · FY27 · High confidence INR 10,000-12,000 crores
    ...and next year we also will be in the same range, about INR 10,000 crores to INR 12,000 crores, because the Aditya Refinery recycling plant projects will be going. So, that is the next year's forecast as well.

    — Satish Pai

Debt

  • Consolidated Net Debt to EBITDA Debt · medium term · High confidence around 2x
    So, the way, Pinakin and we are looking at that, and that is why in the prepared remarks, we are sticking to our commitment of 2 or below at a consol net debt to EBITDA level.

    — Satish Pai

  • Novelis Net Debt to EBITDA Debt · near-term · Medium confidence high 4s
    So, I clarified yesterday on our call that from a net debt to EBITDA perspective, we will go into the high 4s.

    — Dev Ahuja

Cost of Production

  • India Cost of Production Cost of Production · Q4 · High confidence about 1% higher
    Yes, I think that we are expecting 4th Quarter cost to be about 1% higher, largely driven by CP Coke.

    — Satish Pai

Sales Volume

  • Alumina Sales Sales Volume · Q4 · High confidence 170-180 Kt
    Alumina sales for the 4th Quarter should be around 170 Kt to 180 KT. We did 160 in Q3.

    — Satish Pai

Volume Impact

  • Novelis Q4 Volume Impact from Oswego Volume Impact · Q4 · High confidence around 70 Kt
    But all that I can tell you is that it is very safe to assume that the impact on volume from Oswego in Quarter 4 will be similar to Quarter 3 at around 70 Kt.

    — Dev Ahuja

EBITDA Impact

  • Novelis Q4 EBITDA Impact from Oswego EBITDA Impact · Q4 · High confidence $60-65 million
    I mean, 3rd Quarter was, as you know, net $54 million. This could be more in the $60 million to $65 million in the 4th Quarter on EBITDA. That is the guidance I can give to you.

    — Dev Ahuja

Cost to Serve

  • Novelis Cost to Serve Cost to Serve · Q4 · Medium confidence similar lines or a little bit higher as compared to Quarter 3
    So, the cost to serve will steadily continue like we have seen in this quarter. And, so that is the best estimate that we have right now. Now, depending upon the timing of the sourcing, when we are able to actually procure the material, there could be some timing differences. It could be a little bit higher as compared to the current run rate, but a lot of it depends upon the logistics and the ability to have the material coming in. For the time being, I would ask you to kind of just think that the cost for Q4, cost to serve will be on similar lines or a little bit higher as compared to Quarter 3.

    — Dev Ahuja

What to watch in Q4 FY26

Novelis Oswego Hot Mill Restart

Q1 FY27
Current Outage impacting volumes and cash flow
Target Start-up in late Q1 FY27

Why it matters

Crucial for restoring Novelis's full operational capacity, reducing volume impact, and improving cash flow.

Our Oswego hot mill is expected to start in late Q1 FY '27. (Page 9)

Risks & concerns

  • Road Safety Incident

    high

    A road safety incident resulted in a fatality at one of the Indian operations, leading to corrective actions and strengthened audits.

    Management acknowledged

  • Novelis Oswego Plant Fires

    high

    Oswego fires led to exceptional items impacting consolidated PAT, volume decline, and cash flow requirements, with hot mill restart expected late Q1 FY27.

    Management acknowledged

  • Global Growth Outlook

    medium

    Risks include Al investments, overcorrection, renewed trade tensions, geopolitical flare-ups, and rising fiscal and financial vulnerabilities.

    Management acknowledged

  • India Growth Outlook

    medium

    External risks in the form of geopolitical uncertainties and commodity price volatility could weigh on the growth outlook.

    Management acknowledged

  • Copper Demand Destruction due to Price Rise

    low

    Analyst raised concern about demand destruction in copper due to price rise; management clarified Q3 volumes were low due to Diwali season and inventory drawdown, expecting strong Q4 demand.

    Analyst downplayed

Q&A highlights

4 direct
Net Debt Bridge and Reconciliation Partial
So, that $1.7 billion, it translates to, in INR terms, around INR 17000 crores because there is a there is an exchange rate difference on the opening balance as well. So, INR 17000 crores really came in from the Novelis FCF, which was a mix of the Oswego impact, around $485 million, the higher CAPEX in Bay Minette, as well as the increase in material price, that is the LME-driven price impact on the working capital. So, that is on Novelis. In the India business, the net debt increased by around INR 7,000 crores, which was coming really from the copper business layer, because of the increase in the LME, as well as some increase in stock because of the concentrate arrivals.

Analyst questioned a large unexplained increase in net debt; management provided a detailed breakdown attributing it primarily to Novelis FCF (Oswego, Bay Minette, working capital) and India copper working capital.

Asked by Ashish Kejriwal

EBITDA per ton vs LME Price Increase Partial
Yes, I think that when you look at it, you have to get, see, the upstream EBITDA in Q1 was INR 1,467. In Q2, it was INR 1,521, and Q3 is INR 1,573. And you also have to go back and look at my commentary, because we have, along with that, the Specialty Alumina EBITDA, that when we sell, we add. But from Q2 to Q3, there was a sharp drop in the alumina prices. And if you look at my commentary in Q2, we had also got the RPO benefit, which I had talked about in the cost.

Analyst questioned why EBITDA per ton hadn't increased significantly despite rising LME prices; management explained it was due to various moving parts, including alumina price drops and prior RPO benefits.

Asked by Ashish Kejriwal

Novelis Bay Minette Uncontracted Volumes Direct
So, obviously, OEMs are continuing to contract, because they have already made choices as to their material on their vehicles, and will have started production dates over the next several years. We are very positive on our Bay Minette progress and the commissioning in the second half of this year. As we said before, we feel really comfortable about the overall contracting as we ramp up the overall plant over the timeframe of 18 to 24 months.

Analyst asked about the risk of uncontracted volumes for Bay Minette given the Oswego fire; management expressed confidence in contracting due to aluminum's advantages and Novelis's market position.

Asked by Pinakin

Novelis Bay Minette CAPEX Aggressiveness and Timeline Partial
Absolutely. And so the cash flows reflect exactly the way things should be. Now we are in a phase where you will see an acceleration. There has already been some acceleration of the cash flow, and it will keep happening as we approach our commissioning dates towards the later part of this year. So, there is nothing abnormal about the way the cash outflows are going, and it is not just because of the percentage. It is not indicative of any slowness in the project.

Analyst questioned the pace of Bay Minette CAPEX spend relative to the timeline; management clarified that cash flows accelerate closer to commissioning and there's no slowness in the project.

Asked by Vikas Singh

Novelis Net Debt Trajectory and Covenant Partial
So, I clarified yesterday on our call that from a net debt to EBITDA perspective, we will go into the high 4s. And yes, I want to be clear that our debt levels could be going up, will be going up further from this point in time. And they could be for a period of time until the insurance recoveries come, they could be going well above levels of high $8 billion. That is going to be timing, and as the insurance recoveries start coming, we would quickly see that falling below $8 billion.

Analyst sought quantification of Novelis's net debt trajectory; management indicated net debt to EBITDA would reach 'high 4s' and gross debt could temporarily exceed $8 billion until insurance recoveries materialize.

Asked by Parthiv Jhonsa

Novelis $600/ton EBITDA Target vs Competitors Direct
Yes, we stay committed to the building blocks, to the $600 per ton long term. We would have to understand which competitor you are referring to, that they might have a very different product mix from us. But from the underlying efficiency of our business, the target that we have set is a very strong operational performance and very much on the back of the $1,000 plus per ton of EBITDA coming off of the Bay Minette project itself.

Analyst questioned if Novelis was lagging competitors on EBITDA per ton; management reaffirmed commitment to the $600/ton target, linking it to Bay Minette's contribution and underlying operational efficiency.

Asked by Parthiv Jhonsa

Novelis $950M Equity Infusion and Repayment Direct
Essentially, this is going to go towards funding the announced higher cost of Bay Minette, i.e., from $4.1 billion to around $5 billion. That is essentially the logic behind infusing this equity between us and our parent. We agreed that it is not good to go into the debt market to fund this increase. ... But given what happened with Oswego, and we will have a $1.3 billion to $1.6 billion gross outflow until insurance money comes, this also now becomes a bridging money to a very large part to be able to really fund that short-term need, and then insurance money will start coming in.

Analyst asked about the purpose and repayment of the $950M equity infusion; management explained it's for Bay Minette cost increase and bridging Oswego impact, not for debt market funding, and confident in the 5-year tenure.

Asked by Ritesh Shah

Chakla Mine Delay Direct
So, we are still trying to get the certain clearances sorted out. We thought we would do the box cut in January. The box cut now looks like more likely like April. So, yes, there has been about a quarter delay.

Analyst inquired about the Chakla mine timeline; management confirmed a quarter delay for the box cut, now expected in April.

Asked by Rashi

2 min read 5 chapters

Detailed narrative

Q3 FY26 Consolidated Performance and Outlook

Hindalco reported a 6% year-on-year increase in consolidated business segment EBITDA to INR 8,762 crores for Q3 FY26. However, consolidated PAT saw a 45% year-on-year decline to INR 2,049 crores, primarily due to exceptional items related to the Novelis Oswego plant fires. Excluding these impacts, adjusted PAT would have been INR 4,051 crores, an 8% year-on-year increase. The company maintains a strong balance sheet with a consolidated net debt to EBITDA ratio of 1.73x as of December 2025, well below its target of 2x.

Novelis Operations and Strategic Initiatives

Novelis's adjusted EBITDA reached $436 million, translating to $495 per ton, a 22% year-on-year increase when excluding the $54 million impact from Oswego fires and $34 million from tariffs. The company has increased its cost efficiency initiatives run rate to $150 million, up from an initial target of $75 million, and aims for a $300 million structural cost reduction by FY28 exit. The Bay Minette 600 Kt greenfield rolling and recycling facility is on track for completion this year, with the project cost revised from $4.1 billion to $5 billion, funded partly by a $950 million equity infusion from Hindalco.

India Business: Aluminum and Copper

Hindalco's India business delivered robust performance, with EBITDA growing 10% year-on-year to INR 5,660 crores and a record PAT of INR 3,581 crores, up 24% year-on-year. The India Upstream Aluminum segment achieved an EBITDA of $1,572 per ton with 45% margins, driven by operational excellence. Downstream Aluminum shipments increased 9% year-on-year to 108 Kt, with EBITDA up 55% to INR 233 crores. The Copper business, however, saw a 23% year-on-year EBITDA decline to INR 595 crores due to lower TC/RCs and concentrate mix, though management expects Q4 EBITDA to be comfortable at INR 600 crores.

Capital Expenditure and Debt Management

Hindalco's India CAPEX target for FY26 is approximately INR 10,000 crores, including the INR 2,000 crores paid for the Bandha Mine, with a similar range projected for FY27 (INR 10,000-12,000 crores). Novelis received a $750 million equity infusion in December 2025, with an additional $200 million planned for the current quarter, to fund the increased Bay Minette project cost and bridge the impact of Oswego fires. The company aims to maintain its consolidated net debt to EBITDA ratio around 2x, despite Novelis's ratio temporarily rising to the 'high 4s'.

ESG and Sustainability Progress

Hindalco continues to prioritize ESG, achieving an LTIFR of 0.22 and scoring 89 out of 100 in the S&P Global CSA 2025. The company recycled or reused 82% of total waste generated this quarter, including 126% of Bauxite residue and 126% of Copper slag. Renewable energy capacity reached 418 Megawatts by the end of Q3, with plans to add another 103 Megawatts in the following quarter, targeting 522 Megawatts by the end of FY26. Significant efforts are also underway in water conservation and biodiversity enhancement, including planting 70,000 saplings and a coastal ecological initiative.

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