Novelis Inc, the wholly owned subsidiary of Hindalco Industries Ltd, delivered exceptional financial results for the first quarter of fiscal year 2027. According to reports from CNBC TV18, the aluminium rolling and recycling major reported net income of $164 million for the quarter, representing a 71% increase compared to the year-ago period. Excluding special items, net income more than doubled to $265 million, up 128% year-on-year. Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) rose 24% to $516 million during the quarter. As per CNBC TV18, adjusted EBITDA per tonne shipped climbed 30% to $563, supported by lower aluminium scrap prices and cost efficiencies. The results, released on August 5, 2026, highlight strong underlying profitability despite a 5% decline in rolled product shipments to 916 kilotonnes, largely due to production disruptions at the Oswego plant following fires in late 2025. However, CLSA notes that excluding business interruption insurance proceeds, adjusted EBITDA grew 13% year-on-year, broadly in line with estimates, while reported adjusted EBITDA of $563 per tonne exceeded estimates due to insurance recoveries.
Net sales increased 23% year-on-year to $5.8 billion during the quarter, primarily driven by higher average aluminium prices. However, as reported by CNBC TV18, higher revenue did not translate into volume growth. Total rolled product shipments declined 5% year-on-year to 916 kilotonnes. The company attributed the decline mainly to the impact of production disruption at its Oswego facility following fires in fiscal year 2026, which resulted in an estimated negative shipment impact of 33 kilotonnes during the quarter. The Oswego hot mill has since restarted operations in early June, with production ramping up to meet pent-up demand. Despite this volume decline, the divergence between declining volumes and expanding margins underscores Novelis' pricing power and efficiency gains, as favorable scrap prices and cost efficiencies more than compensated for lower throughput. CLSA reports that excluding the combined impact of the Oswego disruption and insurance recoveries, adjusted EBITDA per tonne was $525, broadly in line with estimates.
The results showed varied performance across different geographical segments. In North America, Q1 FY27 shipments decreased by 3% while Adjusted EBITDA saw a 17% decline, partly due to lower shipments and unfavorable product mix related to Oswego fires. Europe experienced a 5% increase in shipments and a 44% rise in Adjusted EBITDA, driven by higher beverage and automotive shipments. Asia's shipments increased by 8%, with Adjusted EBITDA up 30%, and South America saw a 7% increase in shipments and a notable 56% increase in Adjusted EBITDA. The Bay Minette plant commissioning process is also underway in Alabama, positioning Novelis for future growth.
The improvement reflected better operational execution, cost efficiencies and supportive market trends. According to CNBC TV18, Novelis President and CEO Steve Fisher noted that momentum improved after the restart of the Oswego hot mill in early June. The company added that the initial commissioning of key assets at the Bay Minette facility represented another step in expanding manufacturing capabilities. The Bay Minette project is a major investment aimed at increasing Novelis' aluminium rolling and recycling capacity to cater to growing demand from industries such as automotive, beverage packaging and other sustainable aluminium applications. The company recognized $300 million in insurance recoveries through the end of Q1FY27 related to the September and November 2025 fires, with the estimated impact from the Oswego fires resulting in an $18 million net benefit to Adjusted EBITDA as favorable insurance timing offset production interruptions. Management expects the Oswego hot mill to resume full operations by the third quarter of FY27, with production ramping up steadily. The company also reaffirmed that the Bay Minette aluminium recycling and rolling plant remains on track to commence commercial shipments in the first quarter of FY28.
Despite strong profitability, cash flow remained under pressure during the quarter. As reported by CNBC TV18, Novelis reported a net cash outflow from operating activities of $455 million, compared with an inflow of $105 million in the year-ago period. The company attributed the decline primarily to higher working capital requirements caused by rising aluminium prices, along with the impact of the Oswego disruption after adjusting for insurance recoveries. Adjusted free cash flow stood at an outflow of $1.1 billion, compared with an outflow of $295 million a year earlier. The reduction in adjusted free cash flow is mainly driven by lower operating cash flow, as well as higher capital expenditures related to the Company's US greenfield rolling and recycling plant in Bay Minette, Alabama. The net leverage ratio stood at 4.5x at the end of Q1FY27, elevated temporarily due to the timing of fire impacts and Bay Minette capital expenditure. Total liquidity stood at $2.1 billion as of June 30, 2026, with the company entering into a $500 million unsecured term loan facility in July 2026, maturing in July 2028. However, CLSA notes that management expects leverage to decline below 4x by the end of FY27 as working capital normalizes and free cash flow improves, with Novelis's chief financial officer expecting free cash flow to turn positive in Q4FY27.
Major brokerages have maintained positive ratings on Hindalco Industries following Novelis' strong quarterly performance. According to NDTV Profit, Morgan Stanley maintained its 'Overweight' rating on Hindalco with a target price of ₹1,140, citing Novelis' core EBITDA beat and the Oswego recovery, Bay Minette commissioning and cost savings supporting the outlook. Kotak maintained its 'Buy' rating with a target price of ₹1,120, noting that the quarter was in line with expectations with operational headwinds easing, while Oswego's ramp-up remains on track for H2FY27E and Bay Minette is expected to start contributing from FY28E. Macquarie maintained its 'Neutral' rating with a target price of ₹1,080, highlighting that Novelis' EBITDA recorded a modest beat and the expansion programme remains on track, with higher aluminium prices presenting upside risk to Hindalco's FY27 and FY28 consolidated EBITDA. Analysts expect easing operational disruptions at Novelis and the addition of new capacity to support Hindalco's outlook, with the Oswego ramp-up remaining an important near-term monitorable while Bay Minette emerges as a medium-term earnings catalyst.
