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Hindalco reported 2Q consol. adj. EBITDA of INR80bn, significantly higher than JMfe of INR68bn. India aluminium business (incl. Utkal) delivered an EBITDA of INR39bn up 7% QoQ aided by lower CoP and improved realisations (up USD98/t at USD3,328/t in 2Q). Net debt increased sequentially to INR360bn (vs INR355bn in 1Q). Key takeaways from the call are a) aluminium CoP expected to be up 1%-1.5% in 3Q – spot auction prices of coal higher in 3Q so far b) downstream expansion through Silvassa plant and commissioning of Aditya FRP project, after ramp-up should take capacity to 600kt c) 300MW renewables energy target on track with 183MW currently operational d) hedging for 2HFY25; 30% of commodity at USD2,579/t and 15% at zero collar with a bottom of USD2,262/t and ceiling of USD2,567; 15% of currency hedged at INR88 e) alumina expansion to be done in future followed by copper smelter, each being 80bn upstream projects. The long term outlook for Hindalco continues to remain buoyant given a) resilient performance by India aluminium operations b) record high run rates in the copper business c) enhanced coal security post acquisition of Meenakshi, Meenakshi west and Chakla coal mines as well as bauxite through Aditya FRP project and d) growth capex to augment capacity in downstream business. Hindalco, given ~70%+ steady/strong EBITDA being non-LME linked, remains our preferred play in the metal space. Maintain BUY.

* Sierre floods impact Novelis margins: Net sales for Novelis increased ~3% QoQ and ~5% YoY mainly driven by higher aluminium prices and rolled product shipments. Total rolled product shipments increased 1% YoY to 945ktons in 2QFY25 primarily due to strong demand in packaging sheet and partially offset by speciality/automotive shipments. Adjusted EBITDA witnessed a decline of 5% YoY to USD462mn in 2QFY25, primarily driven by increase in aluminium scrap prices, unfavourable product mix and impact of floods. Adjusted EBITDA/t declined by 4% YoY to USD489. EBITDA/ton in 2QFY25 came in at USD489 vs USD526 in 1QFY25.

* India AL business spreads positively impacted by higher realisations; growth capex on track: Aluminium EBITDA (incl Utkal) stood at INR39bn in 2QFY25 vs INR36bn in 1QFY25 primarily driven by lower CoP amidst improved realisations (up USD98/t at USD3,328/t in 2Q). India copper business hit record run rate of INR8.3bn for the quarter, up 3% QoQ. Net debt increased by INR5bn to INR360bn during the quarter, majorly due to working capital requirements. Hindalco remains committed to growth through downstream expansion in Silvassa and Aditya FRP project (set to commission in FY26) to acquire bauxite for captive consumption, taking their downstream capacity to 600kt. The renewables expansion/ Bay Minette plant of Novelis remains on track and to be commissioned by H1CY25 and H2CY26 respectively. The company expects that this project will lead to higher spreads with possible EBITDA/ton of ~USD1k/t.

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