- Novelis reported a 29% YoY rise in Q2FY27 net income to $210 million
- Novelis net sales grew 25% YoY to $5.9 billion, driven by higher aluminium prices
- Adjusted EBITDA rose 20% to $508 million, while shipments fell 2% to 919 kilotonnes
Hindalco Industries' subsidiary Novelis Inc. reported a 29% year-on-year (YoY) increase in net income attributable to its common shareholder at $210 million for the second quarter of fiscal year 2027.
Following the results, brokerages remained divided on Hindalco, with Citi and Jefferies maintaining cautious ratings, while HSBC retained its bullish view.
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Novelis' net sales increased 25% YoY to $5.9 billion in Q2FY27, primarily driven by higher average aluminium prices. At the operating level, adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) rose 20% to $508 million, while adjusted EBITDA per tonne shipped increased 23% to $553.
However, total rolled product shipments declined 2% YoY to 919 kilotonnes, as higher beverage packaging and aerospace shipments were offset by lower volumes in automotive and specialty products.
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Net income, excluding special items, also increased 29% to $146 million. The improvement in profitability was partly supported by insurance recoveries related to the 2025 fires at its Oswego facility. Novelis received $519 million in cumulative insurance recoveries through the end of Q2FY27, including $39 million in business interruption insurance recoveries during the quarter.
What Brokerages Say On Hindalco After Novelis Q2 Results
Citi: Neutral | Target Price: Rs 1,140
Citi maintained its 'Neutral' rating on Hindalco, with a target price of Rs 1,140. The brokerage expects commercial shipments from Novelis' Bay Minette facility to begin in Q1FY28, while the impact of tariffs is likely to normalise in FY28.
It expects Novelis to achieve annual cost savings of $350-400 million by FY28. Citi also expects the company's leverage to decline to 4x by the end of FY27, supported by insurance recoveries and lower capital expenditure.
Jefferies: Hold | Target Price: Rs 1,140
Jefferies retained its 'Hold' rating on Hindalco, with a target price of Rs 1,140. The brokerage noted that operations at Novelis' Oswego facility have normalised, although weaker customer demand remains a concern.
It flagged labour disruptions in South Korea and softer volumes as near-term operating risks. Novelis' rising net debt of $8.5 billion also remains a key financial concern for the brokerage.
HSBC: Buy | Target Price: Rs 1,430
HSBC maintained its 'Buy' rating on Hindalco, with a target price of Rs 1,430. The brokerage highlighted the normalisation of production at Oswego and expects commercial shipments from the Bay Minette facility to begin in Q1FY28.
HSBC expects Novelis to turn free cash flow positive and begin reducing leverage from Q4FY27, supporting its positive outlook on Hindalco.
Novelis' Debt And Cash Flow Remain Key Monitorables
Despite the improvement in quarterly earnings, Novelis continued to report major cash outflows during the first half of FY27.
Net cash used in operating activities stood at an outflow of $418 million in the first six months of FY27, compared with an inflow of $411 million in the corresponding period last year.
Adjusted free cash flow recorded an outflow of $1.8 billion during the period, against an outflow of $499 million a year ago. The higher outflow was primarily due to lower operating cash flow and capital expenditure on the company's Bay Minette rolling and recycling plant in Alabama.
Novelis' net leverage ratio stood at 4.7x at the end of September 2026. Its total liquidity was $2 billion, comprising $1.3 billion in cash and cash equivalents and $761 million in available committed credit facilities.
The company said Bay Minette produced its first coil on the cold mill in September and remains on track to begin commercial shipments in Q1FY28.
Novelis management expects lower capital spending, continued cost discipline and stable underlying business conditions to support a return to positive free cash flow and the beginning of a deleveraging cycle towards the end of FY27.
Hindalco Industries To Report Q2 Results Today: What To Expect
Hindalco Industries is scheduled to announce its September-quarter results on Friday. India's upstream aluminium business is expected to see a 6-7% quarter-on-quarter decline in EBITDA, owing to lower LME aluminium prices and higher costs. The impact is likely to be partly offset by a weaker rupee, higher volumes and alumina sales.
For the September quarter, Hindalco's revenue is estimated at Rs 83,546 crore, while EBITDA is expected at Rs 11,486 crore, with a margin of 13.74%. Net profit is pegged at Rs 6,108 crore.
Meanwhile, its subsidiary Novelis reported a 25% YoY increase in net sales and a 29% rise in net income in Q2FY27. Adjusted EBITDA per tonne shipped increased 23% YoY to $553.
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