Hindalco Profit Declines Amid Elevated Costs from Novelis Production Disruption

Hindalco Industries Ltd Reports Mixed FY26 Performance Amid Twin Blows from Novelis Fires

Hindalco Industries Ltd, the flagship company of the Aditya Birla Group, reported a decline in net profit attributable to owners for the fiscal year 2026 (FY26) despite higher metal prices. The company's annual earnings fell short of market expectations, largely due to the impact of two separate fires at its American subsidiary, Novelis.

Hindalco's FY26 Net Profit Drops 16%

Hindalco's net profit attributable to owners for FY26 declined by 16% to ₹13,391 crore, compared to ₹16,001 crore in FY25. This drop fell short of the ₹16,164 crore estimate in a Bloomberg poll of 28 analysts. The company's fourth-quarter net profit also took a hit, plummeting by 51% to ₹2,597 crore, down from ₹5,283 crore a year ago.

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Breakdown of Hindalco's FY26 Performance

Novelis Impact on Hindalco's Performance

The decline in Hindalco's earnings can be attributed mainly to ₹6,963 crore in one-off expenses linked to the Oswego plant disruption in New York last year. Novelis, a key supplier of rolled aluminium to can makers and auto companies, accounted for 59% of Hindalco's revenue in FY26. The company reported a 15% jump in consolidated revenue from operations, driven by higher aluminium sales and moderate copper sales in the domestic market.

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Outlook for FY27 and Beyond

Hindalco's managing director, Satish Pai, views the outage as a timing-related impact, with current-year headwinds expected to substantially recover in the next fiscal year. The company plans a ₹12,000 crore capex in India for FY27, while Novelis capex will be $2.3-2.4 billion, mostly at Bay Minette. Bay Minette is the site of a new $5.5 billion low-carbon aluminum recycling and rolling plant being built by Novelis Inc, expected to be completed this year.

Analyst Insights

Aditya Welekar, metals and mining analyst at Axis Securities, said, "Earnings were largely impacted by the one-time fire incident at Novelis' Oswego plant. The management has guided for a $1.7 billion restructuring expense, which will weigh on free cash flow, although 70–80% is expected to be recovered through insurance, limiting the long-term financial impact." Welekar also expects higher metal prices to cushion the impact of near-term input cost escalations due to the West Asia war.

India Business Performance

In India, Hindalco reported a record business Ebitda of ₹22,671 crore in FY26, up 6% from FY25. However, Novelis saw Ebitda decline by 5% to ₹14,546 crore in FY26, due to the fire incident that shrunk volumes. The company expects near-term input cost escalations of about 5% sequentially due to the West Asia war, but analysts expect higher metal prices to offset the impact.