Hindalco's India performance topped out, bets on Novelis as it caps a record FY25

Mumbai: Elevated aluminium and copper prices drove Hindalco Industries Ltd’s FY25 revenue and profit to a record high, more than offsetting the tepid performance of its US-based subsidiary Novelis, which battled high input costs. The record performance has also set the performance bar too high for the company to repeat in FY26.

A moderation in metal prices could temper the company’s performance in the new fiscal. But this will likely be offset by an improvement in Novelis’ performance, said Satish Pai, the managing director of Hindalco.

“Between aluminium and copper, I see FY26 to be a reasonably good year. Whether it is as good as FY25, of course, depends on how the macros play out,” Pai said in an interview on Tuesday.

Novelis' performance will improve as the spreads on aluminium scrap, a key input, have bottomed out and are improving now, he said. The only uncertainty for Novelis remains US’ 25% tariffs on aluminium imports from Canada. Novelis ships aluminium from Canada to the US for further processing. If the two neighbours don’t reach a trade deal, it could dent Novelis’ margins, Pai said.

The company reported a consolidated profit of ₹16,002 crore for the year, its highest-ever and 58% more than the previous year. Revenue grew by a tenth to ₹2.38 trillion. Earnings before interest, tax, depreciation and amortization (Ebitda) grew 38% year-on-year to ₹35,496 crore.

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Among business segments, its aluminium upstream business, which produces aluminium from ore, reported the highest growth at 78%, overtaking its cash cow Novelis. The segment reported an Ebitda of ₹16,262 crore compared to ₹15,242 crore for Novelis during FY25. Novelis’ Ebitda was 2% lower year-on-year.

Other business segments include copper and aluminium downstream, which produces value-added grades of the metal. Both the segments reported a 16% growth in Ebitda to ₹3,025 crore and ₹633 crore, respectively.

The performance of the company’s copper smelting business in India is likely to dip in FY26, Pai said, as treatment and refinement charges (TC/RC) for the metal have gone down sharply. TC/RC is the discount paid to smelters like Hindalco for processing copper concentrate into refined metal.

Aluminium metal price on the London Metal Exchange (LME) has moderated slightly from the elevated levels of about ₹2,600 per tonne seen during Q4FY25. Pai expects the price to hover between $2,300 and $2,600 in the new fiscal.

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What will help preserve the margins in the new fiscal will be the company’s upcoming Chakla coal mine in Jharkhand, Pai said, which is expected to become operational in Q1FY26. The company on Tuesday also announced the acquisition of Bandha coal mine in Madhya Pradesh from Essel Mining & Industries Ltd, which is a fellow Aditya Birla Group company. The mine with 197 million tonnes of reserves and 45 years of lease life will be acquired for ₹48 lakh. Hindalco will also assume ₹1,131 crore net debt associated with the mine.

Hindalco ended FY25 with a net debt of ₹35,332 crore compared with ₹31,536 crore at the end of FY24. The increase in debt was largely due to investments made in the US for Novelis’ under-construction rolling and recycling facility at Bay Minette.

The company’s net debt-to-Ebitda ratio improved to 1.06 from 1.21 in March 2024. The leverage ratio is, however, expected to increase as Hindalco goes on a ₹45,000-crore capex spree over the next three years in its upstream aluminium business in India.

The company is targeting consolidated net debt-to-Ebitda of 2, with the ratio ranging 1-1.5 in India and about 3.5 at Novelis.

Shares ofHindalco Industries closed 0.71% higher on the BSE on Tuesday at ₹662.7 compared to a 1.06% fall in the benchmark Sensex.

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