Aditya Birla Group's metals flagship Hindalco Industries has delivered an impressive financial performance for the July-September quarter, with net profit surging 18.4% quarter-on-quarter to ₹4,741 crore. The company's strong domestic operations and disciplined cost management fueled this growth, even as its international subsidiary Novelis faced operational challenges.
Domestic Business Powers Growth
The standout performer in Hindalco's portfolio was undoubtedly its India business, which demonstrated remarkable strength across both upstream and downstream segments. The domestic upstream vertical saw revenue swell to ₹10,078 crore, marking a 10% year-on-year increase, while EBITDA reached ₹4,524 crore. Volumes increased by 341 kilotonnes during the quarter, driven by post-monsoon demand from infrastructure and automotive sectors.
Hindalco's downstream aluminum business, which focuses on value-added products, recorded revenue of ₹3,809 crore – a substantial 20% year-on-year growth. This segment achieved EBITDA of ₹261 crore on the back of higher shipments of extrusions and flat-rolled products destined for renewable energy and electric vehicle applications.
Consolidated Performance and Market Context
At the consolidated level, Hindalco's revenue increased by 2.8% quarter-on-quarter to ₹66,058 crore. More impressively, consolidated revenue surged 13.5% year-on-year, propelled by higher aluminum realizations and 15% volume growth across both upstream and downstream operations. Net profit showed robust year-on-year growth of 21.3%.
The company's performance becomes even more notable when viewed against market conditions. Global aluminum prices on the London Metal Exchange strengthened from $2,350-2,400 per tonne in the April-June quarter to $2,450–2,550 during the September quarter, providing a favorable pricing environment.
A significant contributor to the improved profitability was the reduction in inventory, which decreased from ₹3,080 crore to ₹1,644 crore. This inventory drawdown released approximately ₹1,436 crore in working capital, providing substantial support to cash flows and margins.
Novelis Navigates Challenges
Despite contributing over 60% to group revenue, Novelis faced significant headwinds during the quarter. The subsidiary reported sequential revenue growth of 2.6% to ₹41,418 crore and a 3.6% increase in EBITDA to ₹3,685 crore. While these figures represent year-on-year stability, they demonstrate resilience in challenging circumstances.
A major disruption occurred on September 16 when a fire broke out at Novelis's Oswego plant in New York. Confined to the hot mill area, the incident resulted in an estimated impact of $650 million (approximately ₹5,500 crore). The company expects to restart the affected facility by the end of December, with full ramp-up anticipated within four to six weeks thereafter.
Novelis maintained steady shipments of 950 kilotonnes, achieving record beverage can volumes supported by industry-leading recycled content of 63%. Automotive sheet volumes grew 5% to 180 kilotonnes, capitalizing on the trend toward lightweighting in electric vehicles.
Strategic Investments and Future Outlook
Hindalco is making significant strategic moves to support its growth trajectory. The company announced an equity infusion of $750 million into Novelis, which will be raised as debt through its Dutch subsidiary, AV Minerals (Netherlands). This injection aims to maintain Novelis's net debt-to-EBITDA ratio under 3.5x and ensure stable credit ratings.
At the heart of Novelis's expansion strategy lies the Bay Minette greenfield plant in Alabama, USA. This $5 billion (approximately ₹42,000 crore) project represents the first integrated rolling-recycling facility built in the United States in four decades. The company has revised the project's capital expenditure upward by 22% from the February 2024 estimate of $4.1 billion.
Managing director Satish Pai expressed confidence in the project timeline, stating that the cold-rolling mill is scheduled for commissioning by February 2026, followed by the hot-rolled mill by September 2026. The company has prepared contingency plans and intends to adhere to the revised capex guidance.
Market analysts have responded positively to Hindalco's performance. According to Suman Kumar, Assistant Vice-President for Metals and Mining at Philip Capital, the inventory movement improvement of ₹1,436 crore indicates positive impacts on working capital, cash flows, and profit. Aditya Welekar, Senior Research Analyst for Metals at Axis Securities, noted that the strength of the India business has effectively compensated for weaknesses in the foreign subsidiary.
Hindalco's Q2 performance notably outperformed its peers, dwarfing pure-play state-owned Nalco's net profit of ₹1,430 crore and diversified group Vedanta's ₹1,798 crore profit, cementing its leadership position in the sector.
