Novelis Q1 EBITDA rises 24%; brokerages see recovery upside for Hindalco
Novelis reported June-quarter net sales of $5.8 billion and adjusted EBITDA of $516 million, supported by aluminium prices, lower scrap costs and Oswego’s restart. Brokerages retained constructive views on Hindalco, while flagging elevated leverage and cash outflows ahead of capacity ramp-ups.
What happened
Hindalco Industries · Hindalco’s Novelis reported stronger June-quarter revenue and EBITDA, aided by aluminium prices, lower scrap costs and Oswego’s restart.
Key facts
- Novelis net sales: $5.8 billion, up 23%
- Adjusted EBITDA: $516 million, up 24%
- EBITDA per tonne: $563, up 30%
- Profit after tax: $164 million, up 71%
- Profit excluding special items: $265 million, up 128%
- Volumes: 916 kilotonnes, down 5%
- Operating cash flow outflow: $455 million
- Adjusted free cash outflow: $1.1 billion
- Net leverage: 4.5x trailing EBITDA
- Morgan Stanley target: Rs 1,140
- Kotak target: Rs 1,120
- Macquarie target: Rs 1,080
Why this matters
Improving aluminium economics and expanding recycling capacity reinforce the strategic value of securing low-cost scrap supply and downstream automotive-sheet capabilities.
What to watch
- Oswego reaches stable operating rates without incremental disruption or exceptional costs.
- Bay Minette start-up remains on schedule and within budget, with confirmed auto-sheet offtake.
- Sequential volume growth returns despite potentially softer aluminium prices.
- Net leverage peaks and begins declining as operating cash flow improves.
- Automaker production forecasts, EV adoption trends and aluminium-sheet order commentary strengthen or weaken.
- Any downgrade in Novelis or Hindalco cash-flow guidance, capex increase, refinancing action or rating-agency caution.
- Track quarterly Novelis shipment-volume recovery versus the reported 5% decline, separating beverage-can and automotive demand.
- Monitor Oswego utilization, restart costs and contribution to EBITDA rather than relying on aluminium-price-driven gains.
- Watch Bay Minette construction milestones, commissioning timing, capex revisions and contracted customer volumes.
- Assess Hindalco/Novelis net-debt-to-EBITDA, interest expense and free cash flow as capex peaks.
- Compare realised metal spreads and scrap costs with benchmark aluminium prices to gauge earnings quality.