Hindalco’s FY26: India operations absorb Novelis shock as revenue hits record INR 2.75 trillion

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Hindalco Industries closed FY26 with its highest-ever consolidated revenue and EBITDA, but the profit numbers surfaced through the performance report tells a different tale. Consolidated revenue from operations rose 15.28 per cent year-on-year to INR 2.75 trillion, while consolidated EBITDA climbed 7.33 per cent to a record INR 380.97 billion. Yet reported profit after tax fell 16.32 per cent to INR 133.91 billion from INR 160 billion a year ago, after the company absorbed exceptional losses linked largely to the Oswego plant fires at Novelis.

The divergence between operational earnings and net profitability defined Hindalco’s FY26. India operations across aluminium upstream, downstream and copper delivered record or near-record performances, while Novelis faced one of its most operationally disruptive years in recent history.

Consolidated Q4 FY26 revenue stood at INR 781.33 billion against INR 648.90 billion in Q4 FY25. Quarterly EBITDA rose to INR 111.97 billion from INR 102.96 billion. However, Q4 PAT fell sharply to INR 25.97 billion from INR 52.84 billion. The decline followed INR 41.71 billion of exceptional expenses tied mainly to remediation, repairs and business interruption costs after the Oswego incidents.

Hindalco’s board nevertheless recommended a final dividend of INR 5 per share.

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Novelis loses shipments, margins hold

Novelis entered FY26, contributing roughly 60-65 per cent of Hindalco’s consolidated revenue base. But two fires at its Oswego facility in New York, first on September 16, 2025 and then again on November 20, 2025, disrupted operations across the hot mill, finishing and motor room sections. The incidents halted hot rolling operations at a plant that carries an annual aluminium sheet capacity of approximately 771 thousand tonnes.

The operational disruption pulled Novelis' rolled product shipments down 5.32 per cent to 3,557 thousand tonnes in FY26 from 3,757 thousand tonnes in FY25. Industry estimated that Oswego alone reduced shipments by nearly 145 thousand tonnes during the year.

Consequently, the financial impact was visible. Novelis reported pre-tax fire-related net losses of USD 925 million in FY 2026, net of preliminary insurance recoveries. The cumulative gross cash flow impact of the incident has now been revised upward to USD 1.7 billion, covering repairs, clean-up, idle labour costs and customer mitigation measures.

Ford Motor Company, one of Novelis’s largest automotive customers, disclosed a USD 2 billion headwind linked to the supply disruption, though the automaker managed to secure alternative material supply chains.

Yet even with lower shipments, Novelis’s operating margins did not collapse. Net sales rose 7.49 per cent to USD 18.4 billion due to higher aluminium prices. Adjusted EBITDA per tonne for FY26 stood at USD 462 compared to USD 480 in FY25, while Q4 EBITDA per tonne actually increased 10.12 per cent year-on-year to USD 544.

The margin pliability came from cost controls, lower scrap procurement costs during the Oswego shutdown and Novelis’s global efficiency programme. The company exited FY26 with over USD 200 million in annualised run-rate savings and has now lifted its FY27 savings target to USD 300 million, with a longer-term objective of USD 350-400 million by FY28.

Tariffs, meanwhile, created a USD 143 million gust during FY26, including USD 17 million in Q4 alone. Novelis stated that 70-80 per cent of the total cash flow and EBITDA impact from Oswego could eventually be recovered through insurance claims, although no recovery asset has yet been booked in FY26 accounts due to ongoing investigations and potential disputes with insurers.

India aluminium upstream posts record EBITDA

If Novelis became the drag on consolidated profitability, Hindalco’s India aluminium upstream business became the stabiliser.

Upstream aluminium shipments increased 1.73 per cent to 1,350 thousand tonnes in FY26 from 1,327 thousand tonnes in FY25. Revenue rose 8.31 per cent to INR 414.47 billion, while segment EBITDA surged 16.12 per cent to a record INR 188.84 billion. The division delivered an EBITDA margin of 45.56 per cent.

Hindalco’s aluminium cost of production remained largely contained despite inflationary pressures. Q4 FY26 aluminium production cost rose only 1 per cent year-on-year to USD 1,926 per tonne. Coal sourcing remained diversified, with 61 per cent linkage coal, 37 per cent e-auction coal and the balance from captive mines.

The company’s hedging strategy, however, limited its participation in the full upside of rising LME aluminium prices. Average blended aluminium realisations increased only 3 per cent in Q4 FY26 despite spot LME prices rising 12 per cent, because 64 per cent of metal exposure had been hedged at USD 2,807 per tonne.

For FY27, Hindalco has reduced its hedge ratio to 29 per cent of metal exposure at USD 3,013 per tonne and 14 per cent of currency exposure at INR 90.13 per dollar, signalling a more open participation in spot price movements.

The company also continued expanding its upstream footprint. The Aditya Aluminium expansion project will add 360 thousand tonnes in two phases, with Phase 1 expected by December 2027 and Phase 2 by December 2028. Hindalco’s Chakla coal mine received Stage-1 forest clearance during Q4 FY26, with initial coal extraction expected by Q4 FY27.

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Downstream volumes rise, margins soften

The Indian downstream aluminium business recorded one of the fastest growth trajectories within Hindalco’s portfolio.

Downstream shipments rose to 446 thousand tonnes in FY26 from 402 thousand tonnes in FY25. Revenue increased 24.33 per cent to INR 159.38 billion, while EBITDA jumped 55.24 per cent to INR 9.78 billion. Q4 downstream shipments climbed 18 per cent year-on-year to 124 thousand tonnes, supported by a 28 per cent rise in extrusion demand and 16 per cent growth in flat rolled products.

However, rapid capacity ramp-ups diluted unit profitability. Downstream EBITDA per tonne declined to USD 226 in Q4 FY26 from USD 241 a year earlier as the new 170-thousand-tonne-per-annum flat rolled products facility at Aditya remained in the commissioning and ramp-up phase.

The downstream portfolio is simultaneously shifting toward battery-linked and mobility-focused products. During FY26, Hindalco commissioned the Aditya Battery Foil plant and began commercial supplies to lithium-ion cell manufacturers. The Chakan battery enclosure facility for EV applications also continued scaling up.

Debt rises as capex peaks

Hindalco’s balance sheet absorbed both operational disruptions and an elevated global expansion cycle during FY26.

Consolidated capital expenditure rose 47 per cent year-on-year to INR 316.19 billion, driven primarily by Novelis’s Bay Minette project in Alabama and domestic expansion projects across aluminium and copper.

At the same time, Oswego-related cash outflows touched INR 129.09 billion. Consolidated net debt consequently rose to INR 648.41 billion as of March 31, 2026, from INR 353.32 billion a year earlier. Net cash generated from operating activities fell to INR 102.50 billion from INR 244.10 billion in FY25.

The consolidated net debt-to-EBITDA ratio increased to 1.83 times from 1.06 times, while Novelis’s standalone leverage ratio reached 4.1 times.

FY27 is expected to remain capital-intensive, with planned capex of around INR 300 billion, including INR 120 billion for India projects and USD 2.3-2.4 billion for Novelis. However, management has positioned FY27 as the peak capex year. Once the Bay Minette recycling and rolling facility commissions in late 2026, Novelis capex is expected to decline toward annual maintenance levels of nearly USD 350 million.

ESG metrics continue improving

Hindalco retained its position in the top 1 per cent of the S&P Global Sustainability Yearbook 2026 rankings for the sixth consecutive year.

The company’s waste utilisation rate improved to 88 per cent from 85 per cent in FY25, while 100 per cent of copper slag was recycled. Hindalco also planted 800 thousand saplings during FY26 against 500 thousand a year earlier.

Operational renewable energy capacity expanded sharply from 190 MW to 470 MW during FY26, with a target of 523 MW by Q1 FY27. Aluminium-specific greenhouse gas intensity improved marginally to 19.2 tonnes of CO2 equivalent per tonne of metal produced from 19.4 tonnes earlier.

The company’s lost time injury frequency rate improved to 0.22-0.23 from 0.26 in FY25, although FY26 also recorded a road safety fatality at one of its Indian operations.

By the end of FY26, Hindalco’s financial profile effectively reflected a global downstream business managing a billion-dollar operational disruption and a domestic India metals portfolio delivering record profitability, expanding downstream capacities and maintaining first-quartile cost competitiveness across aluminium production.