Hindalco's Q2 FY26: Navigating Global Headwinds with Indian Resilience

Hindalco Industries Limited, a global leader in aluminium and copper, has reported a robust performance for the second quarter of financial year 2026, demonstrating significant resilience amidst a challenging global economic landscape. The company's consolidated revenue from operations climbed to ₹66,058 crore, marking a healthy 13% year-on-year growth. This strong top-line performance was complemented by a 6% increase in consolidated Business Segment EBITDA, reaching ₹9,104 crore. Notably, the consolidated net profit after tax surged by an impressive 21% year-on-year to ₹4,741 crore, underscoring the strength of its integrated business model and disciplined execution.

The quarter's performance was a testament to the balanced contributions from both its global subsidiary, Novelis, and its Indian operations. Novelis, the world's largest producer of aluminium rolled products, delivered a revenue of approximately ₹41,510 crore (converted from $4,744 million at an exchange rate of ₹87.5 per dollar). Its Adjusted EBITDA, excluding the net impact of tariffs, was up 3$506 per ton. Meanwhile, Hindalco's Indian businesses collectively reported a revenue of ₹25,494 crore, with Business Segment EBITDA growing by 15% year-on-year to ₹5,419 crore and net profit after tax increasing by 7% to ₹3,059 crore.

Strategic Initiatives and Operational Excellence

Hindalco's strategic roadmap continues to focus on sustainable growth, operational efficiency, and capacity expansion. The company's commitment to 'Zero Harm' and 'Circularity' is evident in its sustainability metrics. In Q2 FY26, 78% of total waste was recycled and reused, an improvement from 69% in Q2 FY25. Specific freshwater consumption also reduced year-on-year for both aluminium and copper, driven by advanced recycling and zero liquid discharge systems. The company is actively transitioning to a greener energy mix, with renewable energy capacity standing at 292 MW and a target to reach 522 MW by the end of FY26, including 130 MW of storage-based power.

Novelis is advancing its '3x30' strategy, aiming for 75% average recycled content across its products and reducing emissions to less than 3 tonnes of CO2e per tonne of FRP shipped by 2030. This strategy is designed to enhance its leadership in ROIC and fuel first-mover investments. The Bay Minette greenfield rolling and recycling facility in the U.S. is progressing well, despite an increase in project cost to around $5 billion due to inflation and engineering complexities. This project is crucial for meeting the growing demand for beverage packaging, automotive, and specialty aluminium products in the U.S. The Oswego Plant is also expected to restart its hot mill in December 2025.

In India, Hindalco is 'doubling down' on its upstream aluminium and copper businesses, aiming for industry-best margins and maintaining its position in the first decile of the global aluminium cost curve. The downstream segment is targeted to achieve a fourfold increase in EBITDA by FY30, supported by ramping up projects like Aditya FRP and the Copper IGT project. Several key upstream expansion projects, including Chakla, Meenakshi, and Bandha coal mines, and phases 1 and 2 of the Aditya Aluminium Smelter, are on track.

Market Dynamics and Outlook

The global economic environment, as per IMF's October 2025 update, is projected to moderate, with growth easing from 3.3% in 2024 to 3.2% in 2025. Inflation is expected to ease worldwide, though U.S. inflation may rise due to tariff-related cost pass-throughs. Despite this, India continues to be a beacon of resilience, with RBI projecting GDP growth of 6.8% in FY26 and benign inflation at 2.6%. Festive season retail demand hit a record ₹6 trillion, indicating strong domestic tailwinds.

Aluminium prices are fundamentally supported by the global shift towards electrification, EVs, and infrastructure investments. However, geopolitical uncertainties and investor sentiments continue to influence price resilience. The global aluminium market remained broadly balanced, with China's deficit offsetting a surplus in the rest of the world. India is positioned as a key driver of global aluminium demand, with Q2 FY26 demand projected to grow by 8% year-on-year, primarily led by strong demand in electricals and solar sectors.

In the domestic copper market, demand grew by 11% year-on-year in Q2 FY26, reaching 420 Kt, driven by infrastructure investments and increased electrical applications. However, the copper business faced challenges from a sharp 73% decline in annual benchmark TC/RCs for 2025, underscoring supply-side pressures in the global copper concentrate market. Management is focused on maintaining operational efficiency and navigating these market dynamics with agility.

Financial Discipline and Forward Vision

Hindalco's management emphasized its disciplined capital allocation strategy, committing to keep the consolidated net debt to EBITDA ratio below 2. The company generated a healthy cash flow of ₹8,762 crore in H1 FY26, a 45% year-on-year increase. Capital expenditure deployment stood at ₹11,330 crore, up 23% year-on-year, primarily directed towards capacity expansions across Novelis and India. The company plans capex of around ₹8,500 crore for the current year and ₹11,000 crore for FY27.

Management acknowledged learning from past project complexities, particularly with Bay Minette, and has strengthened project monitoring for Indian initiatives to prevent similar issues. The tone of the commentary was balanced, addressing challenges transparently while highlighting strategic strengths and future growth drivers. Hindalco remains poised to leverage its integrated business model, sustainability focus, and strategic expansions to deliver sustained value for its stakeholders in the coming years.