Hindalco: profit up 58.9%, but net debt added INR 357.7 bn in a year

Hindalco reported the second quarter of fiscal 2027 (July-September 2026) with revenue of INR 917.1 bn, EBITDA of INR 115.3 bn and net profit of INR 75.3 bn. Year-on-year revenue growth accelerated to 38.8% from 32.1% a quarter earlier, EBITDA rose 57.0% and net profit 58.9%, while the EBITDA margin improved to 12.6% from 11.1%. Net debt stood at INR 975.0 bn on 30 September 2026 versus INR 617.3 bn a year earlier, and at an EV/EBITDA of 6.8 the share trades below its own three-year average of 7.3. Our conclusion: fairly valued – the portal model implies only -3% to fair value. Our view: the share is fairly valued; upside on the portal model -3%.

Our view: is there upside

Our view in numbers

Key takeaways

— Revenue rose 38.8% year on year, and growth accelerated from 32.1% a quarter earlier

— EBITDA rose 57.0% and the margin climbed to 12.6% from 11.1% – faster than revenue

— Net profit rose 58.9%, lifting the net margin to 8.2%

— Net debt rose from INR 617.3 bn to INR 975.0 bn over the year – by INR 357.7 bn

— Debt at 2.22x EBITDA with EV/EBITDA at 6.8 – the share is cheaper than its three-year average of 7.3

— The portal model implies -3% to fair value – almost no cushion

Key figures, INR bn

Revenue rose 38.8% year on year, and growth accelerated from 32.1% a quarter earlier

Revenue for the second quarter of fiscal 2027 (July-September 2026) came to INR 917.1 bn, up 38.8% year on year. That is the fastest pace in recent quarters: in the previous quarter ended June 2026 revenue grew 32.1%, and in the quarter ended September 2025 it grew 13.5%. The acceleration has now run for three quarters in a row.

Growth was supported by both volumes and aluminium and copper prices, though the disclosure gives no breakdown by factor. Revenue is growing faster than EBITDA, which means part of the increase came from processing and trading, where margins are lower. For a holder what matters more is that the company is scaling up rather than booking a one-off spike.

EBITDA rose 57.0% and the margin climbed to 12.6% from 11.1% – faster than revenue

EBITDA for the reported quarter was INR 115.3 bn, up 57.0% year on year. The EBITDA margin rose to 12.6% from 11.1% a year earlier. EBITDA outgrowing revenue means operating costs rose more slowly than income – the company captured economies of scale and higher metal prices.

Operating profit was INR 103.1 bn, but it is INR 12.2 bn below EBITDA – that is depreciation. In the previous quarter ended June 2026 EBITDA was INR 103.6 bn, so the sequential increase was about 11%. The year-on-year move is stronger than the sequential one because the year-ago base was weak.

A 12.6% margin is not a record for the company, but it is well above last year's 11.1%. Whether that level holds depends on aluminium and copper prices: if they fall, EBITDA compresses faster than revenue because part of the cost base is fixed.

Net profit rose 58.9%, lifting the net margin to 8.2%

Net profit for the second quarter of fiscal 2027 was INR 75.3 bn, up 58.9% year on year. The net margin rose to 8.2% from 7.2%. Profit grew faster than EBITDA, which points to a lower relative interest burden or a lower effective tax rate.

In the previous quarter ended June 2026 net profit was INR 70.1 bn, so the sequential increase was about 7%. The year-on-year move is stronger, but part of the increase may come from one-offs the company does not disclose. Without segment detail it is hard to judge how durable that level is.

For the dividend what matters is the profit base: over the last twelve months net profit was INR 191.9 bn. That is the profit from which dividend yield and payout cover are calculated.

Net debt rose from INR 617.3 bn to INR 975.0 bn over the year – by INR 357.7 bn

Net debt on 30 September 2026 was INR 975.0 bn versus INR 617.3 bn on 30 September 2025 – an increase of INR 357.7 bn over the year. Since the start of the current fiscal year, from 31 March 2026, debt rose from INR 823.1 bn to INR 975.0 bn, or by INR 151.9 bn in six months.

The ratio of net debt to EBITDA over the last twelve months is 2.22. That is a moderate level for a metals company, but it is higher than it would be with less debt. Profit is growing, which partly offsets the debt increase, but the absolute amount of liabilities is rising faster than EBITDA.

A INR 357.7 bn increase in debt over the year is a large sum that needs explaining. The facts do not say what the money went into: capex, working capital or acquisitions. Without that it is hard to judge whether the debt increase is temporary or structural.

Debt at 2.22x EBITDA with EV/EBITDA at 6.8 – the share is cheaper than its three-year average of 7.3

On the EV/EBITDA multiple for the last twelve months the share trades at 6.8, which is 7% below its own three-year average of 7.3. That means the market values the company cheaper than it did on average over the past three years. At the same time the trailing P/E is 11.2 and return on equity is 20.3%.

Debt at 2.22x EBITDA is not a critical level, but it is higher than it would be with less debt. The combination of moderate leverage and a discount to historical valuation creates scope for a re-rating if profit holds at the current level. However, a 7% discount is a small cushion and does not offset the risk of rising debt.

The portal model, which links EBITDA growth to a target multiple, implies -3% to fair value. That means the current price is close to the model's estimate and there is almost no upside. For a holder this signals that further gains require an improvement in fundamentals.

The portal model implies -3% to fair value – almost no cushion

Our valuation model, which compares EBITDA growth with a target multiple and market capitalisation, shows -3% to fair value. That means the share is fairly valued and the current price offers no substantial cushion. The model does not account for dividends, so for a dividend investor the total return could be higher.

The trailing twelve-month dividend yield is 0.52% – a low level that does not compensate for the lack of growth. For comparison, the key rate in India is higher, and the dividend yield does not look attractive against risk-free instruments. The company pays dividends, but their size is not the main factor for an investor.

Given the 7% discount to historical valuation and the neutral portal model, the share looks fairly valued. A change in the verdict would require either EBITDA growth above expectations, a reduction in debt, or higher dividends.

Valuation on the latest reported figures

Bottom line

The strong side of the report is revenue accelerating to 38.8% and EBITDA rising 57.0% with the margin improving to 12.6%. Net profit rose 58.9% and the net margin reached 8.2%. However, net debt rose by INR 357.7 bn over the year, which needs explaining. At an EV/EBITDA of 6.8 the share is below its three-year average of 7.3, but the portal model implies only -3% to fair value. Our conclusion: fairly valued – almost no cushion. Our view: the share is fairly valued; upside on the portal model -3%.