Talking to ET Now, Aditya Welekar, AVP at Axis Securities, said the numbers were largely in line with Street expectations, with consolidated EBITDA coming close to ₹8,000 crore.
Aluminium division shines
The standout performance came from Hindalco’s upstream aluminium business.
- EBITDA per tonne crossed $1,570
- Strong aluminium prices supported profitability
- Consolidated EBITDA was largely offset by domestic aluminium strength
- Welekar noted that the aluminium division helped cushion the impact of weakness at Novelis.
“The numbers look good, especially on the upstream aluminium front,” he said.
Why did margins fall?
Despite solid earnings, consolidated margins declined to 12% from 13.6%, a contraction of 156 basis points sequentially.
The key reasons:
- $54 million hit to adjusted EBITDA due to the Oswego fire at Novelis
- $34 million impact from tariff-related costs
- The Oswego hot mill disruption has weighed on Novelis’ profitability, dragging overall margins lower.
However, the Street had largely factored in this impact.
Medium-term outlook: Expansion in focus
Looking ahead, management has guided for a potential $150–200 million EBITDA impact due to the Oswego issue over the next few quarters.
But analysts remain constructive on the medium-term story.
Key growth drivers include:
- Ongoing capacity expansion in India
- Novelis’ Bay Minette capex project nearing completion
- Strong global aluminium pricing environment
Insurance claims related to the Oswego fire are expected to help normalise earnings once processed.
Investment view
While near-term margins may remain under pressure for two to three quarters, Axis Securities maintains a positive medium-term view.
With strong aluminium realisations, expansion-led growth and improving global demand trends, Hindalco appears well-positioned once Novelis’ operational issues stabilise.
For investors, the focus now shifts to:
- Management commentary on capex timelines
- Recovery in Novelis EBITDA per tonne
- Sustainability of aluminium prices
The coming quarters will determine whether the margin compression proves temporary or structural.
Disclaimer: The views expressed are those of the analyst and do not constitute investment advice.