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Sustained high scrap prices impacting Novelis margins
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Hindalco Industries Limited — Q3 FY25
Hindalco delivered a strong Q3 FY25 with consolidated EBITDA up 28% YoY to INR 8,108 crore and PAT up 60% YoY to INR 3,735 crore, driven by record Indian aluminum EBITDA of INR 4,222 crore (up 73% YoY) on low input costs and favorable macros.
bullish
high
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Hindalco delivered a strong Q3 FY25 with consolidated EBITDA up 28% YoY to INR 8,108 crore and PAT up 60% YoY to INR 3,735 crore, driven by record Indian aluminum EBITDA of INR 4,222 crore (up 73% YoY) on low input costs and favorable macros. Copper EBITDA rose 18% YoY to INR 777 crore, though Novelis EBITDA fell 19% to $367 million due to high scrap costs. Management guided for Q4 copper EBITDA around INR 600 crore/quarter and expects Novelis margins to improve on higher volumes and repriced beverage can contracts. Key risks include sustained high scrap prices, potential US tariffs on aluminum imports, and execution of a large capex pipeline (INR 40,000 crore in India plus Bay Minette). The company remains focused on cost control and project execution, with no new opportunities being pursued.
हिंडाल्को ने तीसरी तिमाही में शानदार प्रदर्शन किया। कंपनी की कमाई (EBITDA) पिछले साल से 28% बढ़कर 8,108 करोड़ रुपये हो गई। मुनाफा (PAT) 60% बढ़कर 3,735 करोड़ रुपये पहुंच गया। इसकी वजह भारत में एल्युमीनियम कारोबार का रिकॉर्ड प्रदर्शन रहा, जहां कम लागत और अनुकूल बाजार के चलते कमाई 73% बढ़ी। तांबे के कारोबार में 18% बढ़ोतरी हुई, लेकिन नॉवेलिस (विदेशी कंपनी) में ऊंची लागत के कारण कमाई 19% गिर गई। कंपनी को उम्मीद है कि अगली तिमाही में तांबे से करीब 600 करोड़ रुपये की कमाई होगी और नॉवेलिस के सौदों के दाम बढ़ने से मुनाफा सुधरेगा। मुख्य जोखिम हैं - ऊंची लागत, अमेरिकी टैरिफ और बड़े निवेश (40,000 करोड़ रुपये) को पूरा करना। कंपनी लागत नियंत्रण और परियोजनाओं पर ध्यान दे रही है।
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Novelis EBITDA per ton
$406
-19% YoY
Down from $499 in Q3 FY24 due to high scrap prices and unfavorable product mix.
Indian aluminum EBITDA per ton
$1,480
+68% YoY
Record high driven by low input costs and favorable macros.
Indian aluminum EBITDA margin
42%
+73% YoY
Record high margin, among the best globally.
Novelis shipments
904 KT
-1% YoY
Slight decline from 910 KT in Q3 FY24 due to muted demand in specialty and automotive segments.
What Changed vs Last Quarter
NEW
Copper EBITDA to moderate to ~INR 600 crore per quarter
Management expects quarterly copper EBITDA to be around INR 600 crore next year, down from current levels due to lower TC/RCs.
NEW
Novelis Q4 volumes to be meaningfully higher, similar to Q2 levels
Q4 volumes expected to be around Q2 levels (likely ~950 KT), driven by operating leverage and repriced beverage can contracts.
UPDATED
India capex of INR 8,000 crore in FY26
Capital expenditure in India for FY26 is guided at INR 8,000 crore, with peak spending in FY27-FY28.
UPDATED
Novelis Bay Minette project on schedule for H2 CY26 completion
The 600 KT greenfield project remains on track, with 420 KT already contracted for beverage packaging and automotive.
DROPPED
Aluminum smelter expansion to commission by October 2027
The 180kt brownfield aluminum smelter expansion at Aditya is expected to come on stream in October 2027, powered by renewable energy.
DROPPED
Copper smelter expansion to commission in 2029
The 280-300kt copper smelter expansion at Dahej is expected to be completed in 2029, with long-term concentrate contracts being discussed.
NEW RISK
Sustained high scrap prices impacting Novelis margins
High aluminum scrap prices have compressed Novelis EBITDA per ton; management expects scrap prices to peak but structural headwinds remain.
NEW RISK
US tariffs on aluminum imports may not be exempted
Novelis faces uncertainty over tariff exemptions; management is confident but acknowledges risk if exemptions are not granted.
NEW RISK
Execution risk from large capex pipeline
Multiple large projects in India and Novelis simultaneously could strain execution; management is focused but history shows risks.
NEW RISK
Copper TC/RC decline to impact earnings
Benchmark TC/RC fell 73% YoY to $0.056/lb; management guided lower copper EBITDA from Q1 FY26.
RISK GONE
Novelis scrap spread pressure may worsen in H2
Management acknowledged that scrap spreads are in uncharted territory and expect some worsening in Q3 and Q4 due to elevated scrap prices and seasonality.
RISK GONE
Novelis EBITDA per ton guidance of $600 may be delayed
When asked about the long-term $600/ton EBITDA target, management reiterated confidence but declined to provide short-term guidance, indicating uncertainty.
RISK GONE
Copper TC/RCs remain at historically low levels
Spot TC/RCs are at historically low levels, which could pressure copper smelter margins if they do not recover by the time the new smelter is commissioned.
RISK GONE
Geopolitical tensions and China slowdown pose downside risks
Management highlighted increasing geopolitical tensions, negative spillovers from China's slowdown, and financial market volatility as key risks to the global outlook.
🤫 Topics management stopped discussing
Mentioned in Q1 FY24, Q1 FY25, Q2 FY24
Novelis CapEx for FY25 is expected at the lower end of the $1.8-2.1 billion range, around $1.8 billion.
Mentioned in Q1 FY25, Q3 FY24
Concentrate supply constraints are expected to keep spot TC/RCs low, impacting copper margins in the near term.
Mentioned in Q1 FY24, Q2 FY25
Spot TC/RCs are at historically low levels, which could pressure copper smelter margins if they do not recover by the time the new smelter is commissioned.
Mentioned in Q1 FY24, Q2 FY24
Prices remain range-bound; macro headwinds could delay recovery despite tight supply-demand.
Mentioned in Q1 FY24, Q3 FY24
Novelis expects to deliver a sustainable $525 EBITDA per ton in Q4 FY24, driven by market recovery.
Fast read
Guidance and risk preview
Management expects quarterly copper EBITDA to be around INR 600 crore next year, down from current levels due to lower TC/RCs.
High aluminum scrap prices have compressed Novelis EBITDA per ton; management expects scrap prices to peak but structural headwinds remain.
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