Hindalco Industries shares tumbled as much as 4% on Friday morning after subsidiary Novelis Inc. revealed stubborn operational headwinds beneath its headline quarterly earnings.
The selloff was swift. Investors brushed aside a 20.4% year-on-year climb in reported adjusted EBITDA to $508 million, zeroing in instead on shrinking volumes, mounting duties, and cash drain. Novelis shipped 919,000 tonnes of flat-rolled aluminium during the September quarter, down from 941,000 tonnes a year earlier. Strip out $39 million in Oswego fire insurance payouts, and the operational stagnation is clear. Underlying EBITDA stood dead flat at $469 millionâidentical to the previous quarter. Core adjusted EBITDA per tonne slipped to $510 from $512.
| Financial Metric | Q2 FY27 | Q2 FY26 / Prior Period | Year-on-Year / Trailing Trend |
|---|---|---|---|
| Reported Adj. EBITDA | $508 million | $422 million | Up 20.4% |
| Adj. EBITDA / Tonne | $553 | $448 | Up 23.4% (Includes $43/t insurance) |
| Base Adj. EBITDA (Ex-Insurance) | $469 million | $469 million (Q1 FY27) | Flat sequentially |
| Shipment Volumes | 919,000 tonnes | 941,000 tonnes | Down 2.3% |
| Working Capital Outflow | $356 million | â | Elevated inventory burden |
| Capital Expenditure | $768 million | â | Bay Minette project buildout |
Operational disruptions took a direct bite out of margins. A September labour strike at the companyâs South Korean plant wiped out $20 million in earnings through production stoppagesâa direct penalty of $20 per tonne. While workers returned to their posts, Novelis warned that residual friction will bleed into third-quarter results. And trade barriers bit harder. US import tariffs jumped to $78 million from $70 million in the previous quarter as Novelis rushed shipments from its Kingston plant in Canada to feed North American clients while its Oswego plant worked back to baseline.
Cash flow turned deeply negative. Working capital outflows swelled to $356 million, compounding quarterly capital expenditure of $768 million. But management expects relief soon, projecting a release of $300 million from inventory liquidations across the second half of the fiscal year while steering its net debt-to-EBITDA ratio down to 4x by March. Compounding the transitional quarter, Novelis confirmed its chief financial officer will resign in mid-January 2027, with a successor yet to be selected.
Institutional brokerages held their nerve despite the margin miss. CLSA maintained an 'Outperform' rating on Hindalco with a target price of â¹1,240, noting that while adjusted EBITDA per tonne trailed projections, Oswego-related tariff drags of roughly $85 per tonne should evaporate by the fourth quarter as domestic American mills ramp output. JPMorgan reiterated its 'Overweight' call with a target of â¹1,165, tracking progress at the greenfield Bay Minette facility in Alabama.
Novelis rolled its first trial coil at Bay Minette in September 2026, keeping commercial dispatches on schedule for the first quarter of fiscal 2028 before scaling to full capacity over twenty-four months. Total insurance payouts from the Oswego fire are projected to hit $900 million by the close of fiscal 2027 and $1.3 billion the following year, giving Hindalco a sizeable balance-sheet buffer as capital outlays crest.