Hindalco net debt reaches Rs 80,435 crore after heavy H1 capex

Hindalco ended 30 September 2026 with consolidated net debt of Rs 80,435 crore after Rs 20,719 crore of H1 FY27 capex, while net debt to earnings before interest, tax, depreciation and amortisation (EBITDA) eased to 1.80x from 1.95x in June 2026 as business segment EBITDA reached Rs 27,349 crore.

How did Hindalco’s net debt change in H1 FY27?

Hindalco’s consolidated net debt increased by Rs 15,594 crore in H1 FY27, from Rs 64,841 crore on 31 March 2026 to Rs 80,435 crore on 30 September 2026. The debt waterfall shows that Rs 20,719 crore of capital expenditure, a Rs 2,015 crore net Oswego impact and Rs 3,091 crore of other items outweighed the Rs 10,231 crore net inflow from operations.

The absolute debt increase differed from the latest quarterly leverage movement. Net debt to EBITDA declined by 0.15x to 1.80x at September 2026 from 1.95x at June 2026, and was also below 1.83x at March 2026. It nevertheless remained above the 1.23x reported at September 2025.

What funded Hindalco’s H1 FY27 capex?

Hindalco partly funded Rs 20,719 crore of H1 FY27 capex through Rs 10,231 crore of net operational cash inflow. The company said capex was directed towards strategic growth projects and was 83% higher year on year, making it the largest cash use identified in the debt bridge.

Cash flow from operations was Rs 23,319 crore in H1 FY27, up 57% year on year, while the net cash inflow was up 14% year on year. Hindalco attributed the difference in part to higher working capital resulting from the rate impact of higher metal prices, despite the increase in operating cash flow.

The Rs 3,091 crore classified as “others” primarily included dividend payment and non-cash currency translation difference. That classification means the item was not solely an operating cash cost, unlike the separately shown Rs 20,719 crore capex and Rs 2,015 crore Oswego impact.

How much did Oswego add to Hindalco’s debt?

The Oswego fire added Rs 2,015 crore to Hindalco’s H1 FY27 net-debt bridge after disclosed recoveries. The presentation lists Rs 5,134 crore of excess costs to fulfil customer contracts, including associated tariffs, and Rs 143 crore for repairs, operational downtime and other recovery costs.

Those gross costs of Rs 5,277 crore were partly offset by Rs 1,451 crore of property insurance recoveries and Rs 1,811 crore of tariff and freight cost recoveries. The Rs 3,262 crore total offset explains the Rs 2,015 crore net amount used in the September 2026 debt waterfall.

Oswego also remained relevant to Novelis operating performance in Q2 FY27. Novelis reported adjusted EBITDA of $508 million, up 20% year on year, including $39 million of Oswego insurance recoveries, while total shipments fell 2% year on year to 919 kilotonnes as higher beverage packaging and aerospace shipments were offset by lower automotive and specialty-product volumes.

Why did Hindalco’s leverage ratio fall despite higher debt?

Hindalco’s net debt-to-EBITDA ratio fell to 1.80x at September 2026 because earnings increased despite the Rs 15,594 crore H1 increase in net debt. Management said the 1.80x ratio was in line with its capital-allocation framework after the Rs 20,719 crore strategic-growth capex programme.

Consolidated business segment EBITDA rose 55% to Rs 27,349 crore in H1 FY27 from Rs 17,643 crore in H1 FY26. Revenue increased 35% to Rs 176,533 crore from Rs 130,290 crore, while profit before exceptional items increased to Rs 22,002 crore from Rs 12,398 crore.

Non-LME-linked EBITDA, covering Novelis, Copper and Aluminium Downstream, reached an all-time quarterly high of Rs 6,860 crore in Q2 FY27. It was 50% higher year on year and 13% above Q1 FY27 despite a 10% decline in London Metal Exchange prices, according to Hindalco.

Hindalco’s India businesses also reported differing EBITDA growth rates in Q2 FY27. Aluminium Upstream EBITDA rose 55% year on year to Rs 7,009 crore, Copper EBITDA rose 164% to Rs 1,673 crore, and Aluminium Downstream EBITDA increased 26% to Rs 329 crore. Consolidated return on capital employed was 24% at September 2026, compared with 23% at June 2026 and 20% at September 2025.

Conclusion

Hindalco’s H1 FY27 capital allocation resulted in higher net debt but lower leverage. The Rs 20,719 crore capex programme, Rs 2,015 crore residual Oswego impact and Rs 3,091 crore of other items exceeded the Rs 10,231 crore net operational cash inflow, lifting debt to Rs 80,435 crore. Higher business segment EBITDA of Rs 27,349 crore helped reduce net debt to EBITDA to 1.80x.

The next issue is whether cash generation continues to support the strategic growth projects that received the H1 FY27 capex while leverage remains aligned with management’s framework. Hindalco also has an unresolved Oswego financial effect to monitor, as the September bridge still included Rs 2,015 crore after Rs 3,262 crore of disclosed insurance, tariff and freight recoveries.