Hindalco’s ₹74 billion upstream aluminium EBITDA backs firm price outlook as Novelis' Oswego recovery continues

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Hindalco Industries expects aluminium prices to remain firm at around USD 3,200–3,400 per tonne during the rest of 2026, supported by supply disruptions in the Middle East that continue to keep the global market tight.

Managing Director Satish Pai said the company expects its upstream aluminium EBITDA per tonne to remain close to USD 2,000 for the remainder of the year. He added that downstream aluminium volumes are expected to improve over the coming quarters as recently commissioned rolling and extrusion projects continue to ramp up.

Aluminium business delivers record quarter

Hindalco's upstream aluminium business reported a record EBITDA of INR 74 billion (USD 775 million) in the April-June quarter of FY27, compared with INR 41 billion (USD 428 million) a year earlier. EBITDA per tonne increased to USD 2,331, up from USD 1,467 in the same quarter last year.

The downstream aluminium business also improved. EBITDA rose to INR 3 billion (USD 31 million) from INR 2.3 billion (USD 24 million) a year ago, while EBITDA per tonne increased to USD 303, compared with USD 264 in the corresponding quarter of FY26.

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Pai said higher aluminium prices provided additional support during the quarter and helped improve profitability across the downstream business.

According to Pai, aluminium prices briefly touched around USD 3,600 per tonne during the first quarter following tensions in West Asia. While prices have eased, he expects the market to remain supported because some Middle East aluminium capacity remains offline and is unlikely to return before the end of the year.

He said, “I think aluminium prices this year are going to be in that USD 3,200–3,400 range, and hence, our EBITDA per tonne should be around USD 2,000 per tonne for the rest of the year.” 

Hindalco has also hedged around 27 per cent of its aluminium production for the current year at approximately USD 3,000 per tonne. The company has started hedging production for next year at close to USD 3,200 per tonne.

Production costs to increase

Pai said energy costs and raw material prices increased during the first quarter, particularly natural gas, furnace oil and calcined petroleum coke (CPC).

Production costs rose by around 4 per cent compared with the previous quarter and are expected to increase by another 4-5 per cent during the July-September quarter.

However, he noted that the depreciation of the Indian rupee helped offset the higher costs because most of Hindalco's aluminium business is linked to US dollar prices.

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Novelis performance expected to improve

Pai said Novelis delivered a strong first quarter despite challenges from the Oswego plant fire earlier this year.

The Oswego facility resumed operations in June and is expected to reach full production during the second quarter. He also expects the Bay Minette project to begin contributing from the fourth quarter, with a larger earnings impact expected during FY28.

According to Pai, Novelis should deliver steady improvement over the remaining quarters of FY27 as production normalises and new capacity comes online.

Hindalco's consolidated net debt-to-EBITDA stood at 1.95 times at the end of the first quarter. Novelis' net debt-to-EBITDA ratio, which stood at 4.47 at the end of Q1, is expected to remain at a similar level in Q2 before falling below four by Q4FY27. He said, “The worst for Novelis is really over, and as Oswego ramps up, the working capital release happens, inventories come down, I think you’re going to see the net debt-to-EBITDA at the consolidated level by Q4 coming substantially down from 1.95.” 

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Copper outlook remains positive

Simultaneously, Hindalco's copper business recorded EBITDA of INR 9.2 billion (USD 96 million), compared with INR 6.7 billion (USD 70 million) a year earlier, despite lower production due to a planned maintenance shutdown.

Pai commented, “For us in Q1, the copper volumes were down because we had a planned shutdown. So, in Q2 we are going to have a combination of higher volumes of sales as well as higher byproduct prices. So copper Q2 will be stronger than copper Q1.”