Hindalco: How Did the Company’s Profit Fall 45% Despite 14% Growth in Revenue?

Synopsis: With a market cap of more than Rs 2 lakh crore, the company reported a 14 percent YoY increase in revenue, while net profit declined sharply by 45 percent YoY. The company in context saw its stock deliver a compounded return of 30 percent over the last three years.

This flagship metals company of the Aditya Birla Group that operates across aluminium and copper value chains, including mining, refining, smelting, and recycling, saw its shares in focus followed by weak Q3FY26  results with a 37 percent increase in material costs and a 180 percent rise in stock-in-trade purchases.

With a market cap of more than Rs 2 lakh Crore, Hindalco Industries Ltd saw its stock hit an intraday low of Rs 901 which is 6 percent lower than the previous close of Rs 964. The company stock has given a compounded return of 30 percent in the last three years.

Q3FY26 Result

In the latest quarterly result the company has seen its revenue from operations increase by 14 percent YoY, from Rs 58,390 Cr in Q3FY25 to Rs 66,521 Cr in Q3FY26, while the QoQ increased by less than 1 percent from Rs 66,058 Cr. The net profits fell by 45 percent going from Rs 3,735 Cr in Q3FY25 to Rs 2,049 Cr in Q3FY26, while the QoQ decreased by 56 percent from Q2FY26’s Rs 4,741 Cr.

In 9M numbers of the fiscal year, the company saw its revenue from operations increase by 13 percent YoY, from Rs 1,73,606  Cr in 9MFY25 to Rs 1,96,811 Cr in 9MFY26. The net profits for the same period grew by less than 1 percent going from Rs 10,718 Cr to Rs 10,794 Cr.

The company has a 3 year sales CAGR of 7 percent, while the TTM is at 14 percent. The company’s 3 year profit CAGR is at 6 percent, while the TTM number is at 20 percent. The company also has a ROCE of 15 percent and a ROE of 14 percent.

Revenue Split

In Hindalco Industries Limited segment breakdown, Novelis contributed Rs 37,292 crore, accounting for 53 percent. Aluminium upstream generated Rs 10,620 crore, forming 15 percent. Aluminium downstream added Rs 3,909 crore, making 6 percent, while Copper delivered Rs 18,233 crore, contributing 26 percent of segment revenue.

Talking about the profit breakdown, Aluminium upstream led with Rs 4,832 crore, contributing 55 percent. Novelis posted Rs 3,102 crore, accounting for 35 percent. Copper generated Rs 595 crore, making 7 percent, while Aluminium downstream delivered Rs 233 crore, forming 3 percent overall share profit.

The Expense Increase 

Cost of materials consumed increased to Rs. 47,455 Crores in Q3FY26 from Rs. 34,536 Crores in Q3FY25, reflecting a YoY rise of 37 percent. This expense formed nearly 77 percent of total expenses in Q3FY26, compared to around 64 percent share of total expenses in Q3FY25, highlighting higher material intensity.

Purchases of stock-in-trade rose to Rs. 426 Crores in Q3FY26 from Rs. 152 Crores in Q3FY25, registering a YoY increase of 180 percent, these expenses also increased their share in the total expenses in Q3FY26 compared to its Q3FY25 numbers.

Novelis’s weak result & Fire incident 

Hindalco Industries Limited subsidiary Novelis Inc reported weak quarterly results. The results were heavily impacted by fires at its Oswego, US plant in September and November, which disrupted production and led to rolled product shipments being around 72 kilotonnes lower than expected.

Why did the stock fall?

Rising global aluminium and copper prices have significantly increased raw material costs for Hindalco Industries Limited. Copper prices have risen 41 percent since the start of the financial year, while aluminium prices increased 32 percent, directly raising input costs and creating pressure on margins.

As a metals-focused producer, the company remains highly sensitive to fluctuations in aluminium and copper costs. This resulted in cost of materials consumed rising 37 percent year-on-year, while purchases of stock-in-trade surged 180 percent, sharply increasing overall expenses

Hindalco Industries Ltd is the metals flagship of the Aditya Birla Group, headquartered in Mumbai and incorporated in 1958. The company is a global leader in aluminium and copper, operating across mining, refining, smelting, and downstream products, with a strong international presence and subsidiary Novelis.

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