Hindalco non-LME EBITDA reached Rs 6,860 crore in Q2 FY27

Hindalco Industries reported Rs 6,860 crore of earnings before interest, tax, depreciation and amortisation (EBITDA) from businesses not linked to the London Metal Exchange (LME) in Q2 FY27. Copper delivered Rs 1,673 crore, up 164% year on year, while aluminium downstream EBITDA rose 26% to Rs 329 crore.

What made up Hindalco’s non-LME-linked EBITDA in Q2 FY27?

Hindalco said Novelis, aluminium downstream and copper generated Rs 6,860 crore of non-LME-linked EBITDA in Q2 FY27. Management attributed the increase to recovery at Novelis, operational performance in copper, and the expansion of aluminium downstream into new products, applications and premium offerings.

The company did not disclose a separate Q2 FY27 EBITDA number for Novelis in the supplied call. Copper recorded Rs 1,673 crore of EBITDA and aluminium downstream reported Rs 329 crore, meaning the disclosed India businesses accounted for Rs 2,002 crore of the Rs 6,860 crore aggregate, with Novelis making up the undisclosed balance.

The non-LME-linked EBITDA total was reported alongside consolidated business EBITDA of Rs 13,869 crore, up 52% year on year, and Hindalco India business EBITDA of Rs 9,011 crore, up 66%. Consolidated profit after tax rose 59% to Rs 7,533 crore, showing that the quarter’s earnings increase extended beyond the identified non-LME-linked operations.

How did copper change Hindalco’s earnings mix?

Copper changed Hindalco’s earnings mix by producing record EBITDA of Rs 1,673 crore in Q2 FY27, up 164% year on year. Metal shipments increased 2% to 116 kilotonnes (KT), while continuous cast rod volumes were stable at 96 KT.

Management cited operational performance, domestic demand across segments, higher sulphuric-acid and other by-product realisations, and certain one-time gains. It said normalized quarterly copper EBITDA was about Rs 1,200 crore and subsequently indicated a range of Rs 1,200 crore to Rs 1,300 crore for coming quarters, distinguishing the reported result from its expected underlying run rate.

Sulphuric-acid realisations were around Rs 16,000 a tonne in Q2 FY27, compared with about Rs 7,000 a tonne in the same quarter a year earlier and historical pricing of Rs 3,000 to Rs 4,000 a tonne. Management said sulphuric-acid volume was around 300,000 tonnes a quarter and estimated that about half of copper EBITDA came from other products and by-products.

The result came despite India refined-copper demand declining 3% year on year to 388 KT in Q2 FY27. Growth in building, construction and power was offset by softer consumer-durables and electrical-equipment demand, while spot treatment and refining charges remained negative at 48 to 58 US cents per pound because concentrate supply was constrained.

How did aluminium downstream support Hindalco’s diversification?

Aluminium downstream supported Hindalco’s diversification with Q2 FY27 EBITDA of Rs 329 crore, up from Rs 261 crore a year earlier. Shipments rose 6% year on year to 119 KT, and management said product mix and premiumisation drove the 26% increase in EBITDA.

The segment generated EBITDA of US$289 a tonne during the quarter. Management’s stated FY2030 goal is to increase downstream EBITDA fourfold, although it did not provide a base-year figure or annual milestones during the call.

Downstream’s performance contrasted with India upstream aluminium, which generated Rs 7,009 crore of EBITDA, up 55% year on year, on shipments that increased 1% and revenue that rose 33%. Upstream EBITDA was US$2,125 a tonne and its EBITDA margin was 52%, with management citing favourable market conditions and performance across the value chain.

Hindalco had hedged about 29% of its remaining FY27 aluminium commodity exposure at US$3,000 a tonne and 21% of currency exposure at Rs 93 per US dollar. Management said aluminium production costs rose roughly 5% from Q1 to Q2 because of coal and calcined petroleum coke prices, expected another roughly 5% rise in Q3, and anticipated improvement in Q4 as coal availability improves.

What is Novelis expected to contribute to Hindalco’s earnings mix?

Novelis is expected to add to Hindalco’s non-LME-linked earnings through normalised production at its Oswego hot mill, cost restructuring, insurance recoveries and new Bay Minette shipments. Management said production at Oswego had normalised and cumulative insurance recoveries reached US$519 million through September 2026.

Management retained Novelis’s long-term EBITDA guidance of US$600 a tonne and said it expected a return to positive free cash flow and the start of deleveraging by the end of FY27. Novelis’s chief financial officer said a further US$47 million of insurance recoveries should enter EBITDA by the end of FY27.

Management also said tariffs should become fairly marginal by Q4, while a Yeongju strike caused a US$20 million impact in Q2 and could have a broadly similar effect in Q3 before ending. It expects customer supply chains to normalise and shipment momentum to improve from Q4, based on underlying market demand.

The 600-KT Bay Minette greenfield rolling and recycling facility produced its first cold-rolled coil in September 2026. Commercial shipments are expected in Q1 FY28, adding rolling and recycling capacity to Novelis’s operating footprint.

Which projects could change Hindalco’s operating mix next?

Hindalco has more than Rs 50,000 crore of expansion projects under execution in India and another Rs 50,000 crore of opportunities under evaluation. Management said the first project set includes the Pakhajan copper recycling plant, expected to commission in December, and the Aditya Alumina Refinery plus the first 180-KT Aditya smelter line, both scheduled for December 2027.

The second Aditya smelter line and a copper smelter are scheduled for December 2028, according to management. It also identified a potential Mahan smelter expansion and an increase in copper-recycling capacity from 50 KT to 150 KT as subsequent opportunities, while saying it planned to start about one additional project every year and a half.

Management said capital deployment would be managed with the aim of keeping consolidated net debt to EBITDA within two times. The ratio stood at 1.80 times in September 2026, after Hindalco generated Rs 23,319 crore of cash flow during the period and invested Rs 20,719 crore in capital expenditure.

Chakla and Bandha coal mines are also intended to improve raw-material security for upstream aluminium. Management said Bandha had completed its first box cut and should produce first coal in the second half of the next financial year, while Chakla was expected to begin supplying coal around the middle of the next year.

Conclusion

Hindalco’s Q2 FY27 result shows that copper, aluminium downstream and Novelis supplied Rs 6,860 crore of EBITDA from businesses management describes as less correlated with LME price movements. Copper’s Rs 1,673 crore result was assisted by elevated sulphuric-acid pricing and one-time gains, while downstream aluminium increased EBITDA to Rs 329 crore through mix and premiumisation.

The next measures to watch are management’s Rs 1,200 crore to Rs 1,300 crore normalized quarterly copper EBITDA range, the expected reduction in Novelis tariff effects by Q4, and Bay Minette commercial shipments in Q1 FY28. Commissioning milestones from December through December 2028 and adherence to the two-times net-debt-to-EBITDA objective will also determine how the expansion programme progresses.