Hindalco‍‌‍‍‌‍‌‍‍‌ Shares Price Down 5% as Novelis Q2 FY26 Profit Drops on Tariff Impact and Fire Disruption

Mumbai, 6th November 2025: The share price of Hindalco Industries Ltd (NSE: HINDALCO) fell over 5% on Thursday following the release of Q2FY26 results by its wholly-owned subsidiary, Novelis Inc.. The decline in operating profit at Novelis was driven by higher scrap prices, net tariff impacts, and a fire at the Oswego plant in the U.S., among other factors, putting pressure on investor sentiment.

Novelis Q2 FY26 Earnings Under Pressure

Novelis, the world’s largest aluminum recycler and rolling company, reported a 27% increase in net profit to $163 million for Q2FY26. However, adjusted EBITDA declined 9% year-on-year to $422 million on flat shipments of 941 kilotonnes. The decline was mainly due to a $54 million net negative tariff impact and rising aluminum scrap prices. Positive factors, such as higher product pricing and cost-efficiency initiatives, only partially offset these headwinds.

Regional Performance: Mixed Results Across Markets

In North America, shipments fell 7% due to weaker demand for beverage packaging, leading to a 28% decline in adjusted EBITDA. In Europe, recovery from the Sierre flood and improved pricing drove a 12% increase in shipments, with EBITDA rising 29%. Asia saw shipments grow 12%, though EBITDA increased only 9%. In South America, shipments declined 2%, with a corresponding 12% drop in EBITDA.

Fire Incident at Oswego Plant Disrupts Operations and Affects Earnings

A fire in September at Novelis’ Oswego, New York hot mill caused a temporary shutdown of the process line. Fortunately, no injuries were reported. The plant restoration is underway, with operations expected to restart in December 2025.

The incident resulted in $21 million in related charges and is expected to materially impact FY26 free cash flow by $550–650 million, with an estimated EBITDA loss of $100–150 million. The company anticipates that insurance will cover 70–80% of the losses.

Continued Strategic and Cost-Saving Initiatives

Novelis reaffirmed the work in progress on its $5 billion project at Bay Minette, Alabama, and said that it is excited about cold mill commissioning starting in Q4FY26 with full ramp-up by 2H CY2026.

The cost-cutting program is designed to achieve more than a $125 million run-rate by the end of FY26. It aims at reducing $300 million by FY28 through plant rationalization and SG&A optimization.

Liquidity and Leverage Remain Steady Despite Challenges

At the end of September 2025, Novelis had a liquidity position of – $2.9 billion that included $1.2 billion in cash. It had a net leverage ratio of 3.5x compared to 2.9x in March 2025. The total debt stood at $6.9 billion.

Stock Performance

The stock opened at ₹788.00 as compared to the previous close of ₹831.40 and touched an intraday low of ₹778.10. At 2:22 pm IST, the stock traded at ₹783.25 – down by 5.79%.

REF: https://nsearchives.nseindia.com/corporate/HINDALCOIND_04112025184037_Novelis_Q2_FY26_Results_Reg_30_signed.pdf

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