Hindalco’s profit rose 59% as Novelis’ cash outflow reached $1.8 billion

The profit increase was mostly operational

Q2 consolidated net profit

₹7,532 croreProfit was ₹4,741 crore a year earlier.

Q2 consolidated revenue

₹91,708 croreRevenue rose 39% year on year.

Q2 consolidated EBITDA

₹13,757 croreEBITDA rose 42% year on year.

Hindalco Industries reported a 59% year-on-year increase in consolidated net profit to ₹7,532 crore for the quarter ended September 30, 2026. Revenue rose 39% to ₹91,708 crore, while earnings before interest, tax, depreciation and amortisation, or EBITDA, increased 42% to ₹13,757 crore.

Reuters attributed the improvement to higher aluminium prices and increased production. Hindalco also reported stronger results across its Indian aluminium and copper operations and at Novelis, its wholly owned rolled-aluminium subsidiary.

Exceptional items made the profit comparison more favourable. The latest quarter included net exceptional income of ₹284 crore, against an exceptional expense of ₹182 crore a year earlier. The Economic Times calculated that profit still rose more than 47% after excluding those items, so the earnings increase cannot be dismissed as an accounting effect.

The more important qualification lies outside the income statement. Hindalco’s investment programme and Novelis’ working-capital outflow have raised debt even as quarterly earnings improved.

Hindalco’s stronger quarter reflects broad operating gains, although exceptional items amplified the headline profit increase.

The earnings recovery is real, but it has not yet become balance-sheet repair.

Novelis improved without volume growth

Novelis adjusted EBITDA

$508 millionThe figure increased 20% from $422 million.

Novelis rolled-product shipments

919 kilotonnesShipments declined 2% year on year.

Adjusted EBITDA per tonne

$553The figure increased from $448 a year earlier.

Novelis’ adjusted EBITDA rose 20% to $508 million even though rolled-product shipments declined 2% to 919 kilotonnes. Adjusted EBITDA is the subsidiary’s operating profit measure before interest, tax, depreciation and selected items; per-tonne EBITDA increased 23% to $553.

The combination shows that pricing, cost reductions and the recovery of the Oswego plant mattered more than additional sales volume. Novelis’ net sales increased 25% to $5.9 billion, but the company said higher average aluminium prices were a principal reason. Higher metal prices increase reported revenue because Novelis passes much of the metal cost through to customers.

The operating recovery is nevertheless material. Oswego’s hot mill had returned to normal production after the 2025 fires, while Novelis reported adjusted EBITDA of $422 million in the comparable quarter.

For investors, the limitation is clear. Better profit per tonne can support debt service, but falling shipments provide less evidence that end-market demand is strengthening. The earnings recovery is real, but it has not yet become balance-sheet repair.

Novelis generated more profit from each tonne, but higher metal prices lifted sales without producing volume growth.

Investment raised debt faster than earnings

Hindalco consolidated net debt

₹80,435 croreNet debt was ₹64,841 crore on March 31, 2026.

H1 strategic capital expenditure

₹20,719 croreSpending increased 83% year on year.

Novelis H1 adjusted free-cash-flow outflow

$1.8 billionThe comparable outflow was $499 million a year earlier.

Consolidated net debt to EBITDA

1.80 timesThe ratio was 1.23 times a year earlier.

Hindalco’s consolidated net debt increased by ₹15,594 crore in six months, reaching ₹80,435 crore on September 30 from ₹64,841 crore on March 31. The group spent ₹20,719 crore on strategic projects during the half year, 83% more than a year earlier.

Novelis accounted for much of the cash pressure. It reported a $418 million operating-cash outflow for the first half, compared with a $411 million inflow a year earlier, because of adverse working-capital movements and the effects of the Oswego fires. Its adjusted free cash flow, a company measure after capital expenditure and specified adjustments, was an outflow of $1.8 billion against $499 million previously.

Novelis’ adjusted net debt reached $8.52 billion, while its net leverage ratio rose to 4.7 times. At group level, Hindalco’s net-debt-to-EBITDA ratio was lower at 1.80 times because its profitable Indian operations support the consolidated calculation, but that was still above 1.23 times a year earlier.

The financial mechanism is straightforward. Until construction spending falls and working capital reverses, stronger accounting profit will not produce equivalent debt reduction.

Capital spending and Novelis’ cash outflow, rather than weak reported profit, explain Hindalco’s higher debt.

The case for patience is credible

Bay Minette first commercial shipments

Q1 FY28The target remains subject to successful commissioning and ramp-up.

Novelis liquidity

$2 billionThis comprised $1.3 billion of cash and $761 million under committed credit facilities.

The strongest case against focusing on debt is that Hindalco is funding assets that are close to generating revenue, rather than covering operating losses. Novelis produced the first cold-mill coil at its Bay Minette plant in September and expects commercial shipments in the first quarter of FY28.

Management expects reduced construction spending, continued cost control and stable business conditions to return Novelis to positive free cash flow and begin deleveraging towards the end of FY27. Novelis also had $2 billion of liquidity on September 30, including $1.3 billion in cash and $761 million available under committed credit facilities.

Hindalco’s consolidated leverage provides further support. The net-debt-to-EBITDA ratio fell from 1.95 times in June to 1.80 times in September as earnings increased, despite the higher absolute debt. It also remained below the 2 times threshold that management cited in its August earnings call.

That argument changes the conclusion from negative to mixed. The balance sheet is carrying more risk, but the current figures do not show funding distress. They show a company approaching the point when a large investment must start producing cash.

The strongest counterargument is that leverage remains controlled and the largest project is moving from construction towards production.

Several conditions must hold together. Oswego must continue operating normally, Bay Minette must start commercial shipments in the first quarter of FY28, and lower construction spending must outweigh any further working-capital demand. Novelis must also preserve its improved $553 adjusted EBITDA per tonne if aluminium prices or customer demand weaken.

A delay would keep interest-bearing debt elevated and leave Hindalco more dependent on cyclical aluminium and copper earnings. A successful ramp-up would add rolled-product capacity, reduce annual capital spending and allow the subsidiary’s operating profit to reach the parent as cash rather than higher debt.

Novelis’ third-quarter FY27 cash-flow statement will provide the next test of management’s year-end deleveraging expectation. The later test is the first-quarter FY28 commercial-shipment milestone at Bay Minette, because production and customer deliveries, not the first trial coil, determine whether the project begins to fund itself.

The investment case now depends on Novelis converting its operating recovery and Bay Minette commissioning into positive free cash flow.

Sources

1. Hindalco Industries Limited · nsearchives.nseindia.com
2. November 6, 2026 - nsearchives.nseindia.com · nsearchives.nseindia.com
3. Novelis Reports Second Quarter Fiscal Year 2027 Results · investors.novelis.com
4. November 5, 2026 - EX-99.1 - 8-K: Current report | Novelis Inc. · investors.novelis.com
5. November 5, 2026 - 10-Q: Quarterly report [Sections 13 or 15d] | Novelis Inc. · investors.novelis.com
6. India's Hindalco posts higher profit on firmer metal prices · reuters.com
7. Hindalco Q2 result: Net profit jumps 59% to ₹7,533 cr, revenue rises 39% · business-standard.com
8. Hindalco Q2 Results: Revenue jumps 39% YoY to Rs 91,708 crore; profit rises 59% on one-time gain · economictimes.com