Hindalco's Q1 profit jumps, lifted by strong sales of value-added products

Mint

a day ago

Robust sales of value-added products such as mobile phone parts and battery enclosures helped aluminium and copper producer Hindalco Industries Ltd post a 30% year-on-year increase in profit for the first quarter of FY26.
The Aditya Birla Group company reported a consolidated net profit of ₹4,004 crore in the three months to June, compared to ₹3,074 crore in the same period last year, beating consensus estimate of ₹3,788 crore in a Bloomberg poll of 15 analysts.
'Looking ahead, our integrated business model, strategic investments and cost discipline, position us well to deliver sustained growth," Satish Pai, managing director at Hindalco, said in a statement on Tuesday.
Consolidated revenue for the April-June period rose 13% to ₹64,232 crore, from ₹57,013 crore in the same period last year. Consolidated Ebitda, or earnings before interest, taxes, depreciation, and amortization, for the first quarter stood at ₹8,673 crore, up 9% from the same quarter last year.
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The company's Ebitda from the aluminium downstream segment rose to ₹229 crore in the first three months of FY26, compared to ₹110 crore in the same period a year ago. Shares of the company closed 0.7% lower at ₹666.95 apiece on the BSE on Tuesday.
Analyst outlook
However, analysts expect the cost of aluminium production to go up in the ongoing quarter, as the entire Q2 falls in the peak monsoon season, which typically disrupts production and raises expenses.
'The cost of coal will be higher and for copper they have maintained their Ebitda guidance of ₹600 crore (quarterly run rate), so no change in that," Aditya Welekar, senior research analyst, metals, at Axis Securities, said.
As a result, earnings during the July-September period might be flat or slightly negative sequentially, said Welekar. However, the company is positioned for strong growth in the long run, as several large projects are expected to become fully operational after FY28, he added. These include an 850 kilo tonnes per annum (ktpa) alumina refinery, a 180 ktpa aluminium smelter, a 300 ktpa copper smelter, a 50 ktpa copper recycling plant, and Novelis' Bay Minette project, which will add 600 kilo tonnes of capacity by the second half of CY26.
The company has been able to push a lot of its value-added products into the market, including parts for high-end braking systems, Pai said, underlining the reason behind a 2x jump in downstream Ebitda.
Upstream refers to producing metal from raw ore, while downstream involves value-added processes that turn the metal into finished products.
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The aluminium upstream Ebitda also rose on account of lower input costs.
'On the aluminium upstream segment, the cost control was quite surprisingly positive, the cost of coal was on the lower side because of which upstream aluminium Ebitda has also beaten the expectation," said Welekar.
Pai also acknowledged that a large part of the Ebitda increase is coming from higher-end products, providing cushion to the company during volatility in commodity prices.
Novelis faces cost pressure
Aluminium smelter Novelis, Hindalco's US-based subsidiary, reported a $4.72 billion revenue during the June quarter, up 13%, due to higher average aluminium prices. However, the adjusted Ebitda fell 17% to $416 million due to the impact of higher scrap prices and tariffs.
"On the India side, we actually did not see any impact at all because most of our sales are in India and to mostly Southeast Asia and Far East customers," said Pai. On the other hand, Novelis did see some impact due to tariffs.
Novelis has set a $300 million cost-reduction target by FY28. Of this, it initially aimed to achieve $75 million savings in FY26 through headcount optimisation and reduction, but has now raised the goal to $100 million. The remaining $200 million in savings is expected from operational efficiency improvements and outsourcing.
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In the June quarter, Hindalco also announced the $125-million acquisition of US-based AluChem Companies as it ventures into high-tech alumina. This was the company's third acquisition of a metals company in the US.