Why are Hindalco shares up nearly 4% today? Explained

Shares of Hindalco Industries gained nearly 4% in early trade on May 20 after investors reacted positively to the March quarter performance and outlook commentary of its subsidiary Novelis, despite concerns around higher debt levels and the financial impact of the Oswego plant fire.

Hindalco shares were trading at ₹1,085.60, up 3.56% on the NSE, after touching an intraday high of ₹1,089.50. The stock also moved close to its 52-week high of ₹1,105 during the session.

Novelis, the aluminium rolling and recycling major owned by Hindalco, reported Q4FY26 adjusted EBITDA per tonne of $544, compared to $494 in the year-ago period. The company said profitability was impacted by the Oswego facility fire incident and tariff-related pressures, though insurance recoveries linked to flooding at the Sierre facility provided some support.

Shipments during the quarter declined 12% year-on-year to 844 kilo tonnes.

While operational performance remained resilient, investors continued to monitor a few key concerns highlighted in the update. Novelis estimated the fire-related free cash flow impact at nearly $1.7 billion before insurance recoveries, higher than its earlier estimate range of $1.3–1.6 billion.

The company’s leverage also rose during the quarter, with net debt-to-EBITDA increasing to 4.1x, the highest level seen in nearly 23 quarters. Net debt rose 8% sequentially to $6.8 billion.

Despite the near-term concerns, management maintained its broader guidance and long-term outlook, which appeared to support investor sentiment.

Novelis reiterated that it expects to turn free cash flow positive by the end of FY27. The company also said the restart of its New York plant is expected in the coming weeks.

In addition, the much-tracked Bay Minette project remains on schedule for completion by the end of calendar year 2026, reinforcing confidence around future growth capacity and downstream aluminium demand.

Analysts have been closely watching Novelis’ execution amid global aluminium demand trends, tariff-related uncertainties and the impact of operational disruptions. However, the reaffirmation of guidance and improving profitability metrics appear to have overshadowed concerns around leverage and temporary disruptions in the latest trading session.

Disclaimer: This article is for informational purposes only and should not be construed as investment advice.