The shares of this large cap company majorly engaged in the production of Aluminium and Copper which includes aluminium sheet, extrusion and light gauge products for use in packaging markets like beverage and food, can and many more were in focus after the the management sees recovery in Novelis business which was disrupted by fire accident
With the market capitalization of Rs. 2,24,970 Crores, the shares of Hindalco Industries Ltd were trading at around Rs. 1,001 per share which is 15 percent discount from its 52 week high of Rs. 1,179 per share and is trading at a P/E of 10.8 where as industry P/E stands at 21.8
Hindalco’s Earnings: India Aluminium & Copper vs Novelis
Novelis contributed 63 percent of the total revenue whereas India business contributed the remaining portion of the revenue. Hindalco’s earnings can be broadly divided into two businesses for this analysis: India Aluminium & Copper on one side and Novelis on the other. In Q1 FY27, the India businesses generated ₹8,606 crore of EBITDA, while Novelis reported ₹4,875 crore of adjusted EBITDA. Together, they contributed ₹13,481 crore of business-segment EBITDA.
The India business was led by Aluminium Upstream, which delivered ₹7,390 crore of EBITDA, up 81% YoY, while Copper contributed ₹918 crore, up 36%. Aluminium Downstream added another ₹298 crore. Aluminium Upstream EBITDA per tonne also increased sharply to $2,331/tonne, while copper continued to deliver strong profitability despite lower volumes due to planned maintenance. T
Novelis: Higher EBITDA Despite Lower Shipments
Novelis delivered ₹4,875 crore of adjusted EBITDA in Q1 FY27, compared with ₹3,557 crore in Q1 FY26. In dollar terms, adjusted EBITDA increased from $416 million to $516 million, while shipments declined from 963 Kt to 916 Kt, a 5% YoY fall. The important point is that Novelis was able to generate higher EBITDA despite lower shipments, with its EBITDA per tonne rising from $432 to $563.
This makes EBITDA per tonne an important metric for assessing Novelis. The nine-quarter data shows EBITDA per tonne moving from $525 in Q1 FY25 to $489 in Q2 FY25, $406 in Q3 FY25, $494 in Q4 FY25 and $432 in Q1 FY26, before recovering to $506 in Q2 FY26, $495 in Q3 FY26, $544 in Q4 FY26 and $563 in Q1 FY27. The latest $563/tonne in Q1 FY27 is therefore the highest level in the nine-quarter series and around 30% above $432/tonne in Q1 FY26. The improvement has also continued for three consecutive quarters, from $495 in Q3 FY26 to $544 in Q4 FY26 and $563 in Q1 FY27.
Can Novelis Sustain the Improvement in EBITDA/tonne?
The improvement in Novelis’ unit profitability is important because the company’s shipments have not been the main driver of the recent EBITDA increase. Management said Novelis achieved $225 million of run-rate cost savings and continues to target $350–400 million of structural cost savings by the end of FY28. Management also indicated that scrap prices were moving positively and supporting margin improvement. Novelis has retained its long-term EBITDA/tonne guidance of $600, compared with $563/tonne in Q1 FY27.
With Novelis already accounting for around 36% of the combined business-segment EBITDA, a sustained increase in EBITDA/tonne could provide meaningful support to Hindalco’s earnings, while a reversal could have the opposite effect.
Bay Minette: Future Capacity Addition
Novelis is also progressing with its 600 Kt Bay Minette greenfield rolling and recycling facility. Commissioning of key assets is underway, and commercial shipments are expected in Q1 FY28. This makes Bay Minette an important future capacity driver for Novelis, although its contribution is still ahead rather than part of the current Q1 FY27 earnings base.
Oswego Disruption Adds an Earnings Risk
The improvement in Novelis also needs to be viewed against the disruption at its Oswego facility. The mill restarted in June 2026 and is currently ramping up. Management expects a significant portion of the headwinds from the fire disruption to be recovered over the following fiscal year, making the restart an important factor for Novelis’ operating performance.
There was also a specific benefit in Q1 FY27, with Novelis reporting an $18 million net positive impact from the Oswego fires, including $47 million of insurance proceeds. This means the Q1 EBITDA figure should be viewed in the context of both the operational disruption and the insurance recovery rather than assuming that every component of the reported improvement represents a normalised recurring run rate.
US Tariffs Could Keep Pressure on Novelis
US aluminium tariffs are another factor that could affect Novelis’ profitability. Management said the business absorbed a $70 million tariff impact in Q1 FY27, and this impact was included in adjusted EBITDA. Novelis continued to require imports because US capacity was constrained while the company was reconfiguring its supply chain following the Oswego disruption. Management indicated that some tariff impact could continue over the coming quarters as the supply chain adjusts.
This creates a near-term risk to Novelis’ margins even as the company benefits from cost savings and improving scrap economics. As Oswego returns to normal operations, the company expects its reliance on imports to reduce, which could help lower some of the tariff-related pressure.
Scrap Economics Also Matter
Scrap prices are another factor behind the recent improvement in Novelis’ profitability. Management said scrap prices were moving in a positive direction and supporting margins. This is relevant because Novelis has a significant recycling and rolling business, meaning changes in scrap economics can influence its profitability per tonne.
Novelis Has Higher Leverage Than the Consolidated Business
The balance sheet adds another dimension to the comparison. As of June 30, 2026, Hindalco’s consolidated net debt stood at ₹77,495 crore, with consolidated net debt/EBITDA at 1.95x. Novelis had a much higher net debt/EBITDA of 4.47x, while India consolidated leverage was -0.22x.
This means Novelis combines a sizable contribution to Hindalco’s earnings with significantly higher leverage than the consolidated business. Management expects Novelis’ net debt/EBITDA to start declining from Q4, while Hindalco’s consolidated leverage may remain broadly stable in the near term because India is going through a high-capex phase.
Conclusion:
Novelis is now an integral part of Hindalco’s business and has been able to generate 36% of the total business segment EBITDA. The rising EBITDA per tonne, efficiency in operations, and expansion of capacities can ensure profits going forward. On the other hand, reduced shipments, tariffs, operational issues, and higher leverage pose as major risks. Hence, any significant change in Novelis’ profits will have an effect on Hindalco’s profits as well.