Hindalco’s aluminium arm Novelis reports a robust June quarter with rising EBITDA and sales, sparking optimism about its recovery, yet investor sentiment remains divided over the stock’s valuation and future growth trajectory.
Novelis’ latest numbers have given Hindalco Industries fresh support from the market, but investors remain divided over how much of the recovery is still left to play out in the share price.
The aluminium rolling and recycling arm, which is wholly owned by Hindalco, reported a sharp improvement in the June quarter, with adjusted EBITDA rising 24% year on year to $516 million and net income jumping 71% to $164 million, according to company results. Net sales climbed 22.8% to $5.8 billion, helped by firmer aluminium prices and stronger demand from automotive, packaging and construction customers. The company’s full fiscal 2026 performance was also stronger, with annual net sales reaching $18.4 billion, underscoring the scale of the rebound.
Operating momentum also improved at the plant level. Novelis said shipments held at about 916 kilotonnes for the quarter, though that was down 5% from a year earlier after disruption at its Oswego plant. The site restarted in early June after fires had cut production, and analysts say a fuller recovery there could add another layer of volume-led earnings growth on top of the gains already visible from pricing and product mix. Hindalco’s consolidated numbers have already reflected some of that strength: Business Standard reported that the parent’s Q4 FY26 EBITDA rose 5.9% to ₹10,180 crore, supported in part by Novelis’ turnaround.
The bigger story for investors may be the shift in Novelis’ capital profile. After a prolonged stretch of heavy spending on capacity expansion, management is now pointing towards stronger cash generation and a net leverage ratio below 4 times by the end of FY27. That matters for Hindalco because a faster deleveraging path would ease balance-sheet pressure at the group level and could create more room for capital allocation elsewhere. Novelis’ investor materials show the company continues to frame sustainability, recycling and operational efficiency as central to its strategy.
Brokerage views remain constructive on earnings but less unified on valuation. JPMorgan has kept an overweight stance with a target price of Rs 1,125, citing Novelis’ recovery and a firmer aluminium cycle, while also turning more positive on the wider sector because of supply disruption and tighter ex-China markets. Jefferies has taken a similar line, pointing to better execution and the gradual normalisation of Oswego. Nuvama, by contrast, has warned that much of the operational improvement may already be reflected after Hindalco’s 16.2% rise this year.
For now, the key question is whether the latest quarter marks a durable inflection or simply the high point of a strong rebound. The pace of the Oswego restart, the direction of aluminium prices and Novelis’ progress on debt reduction will all be watched closely in the coming quarters. With opinion already split on valuation, the next leg of the stock’s move is likely to depend less on the recovery story itself and more on whether the numbers keep improving at the same pace.
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