Hindalco Industries Ltd (NSE: HINDALCO) Q3 2026 Earnings Call dated Feb. 12, 2026
Corporate Participants:
Mr. Subir Sen — Head of Investor Relations
Satish Pai — Managing Director
Steve Fisher — President and Chief Executive Officer, Novelis
Dev Ahuja — Chief Financial Officer, Novelis
Analysts:
Ashish Kejriwal — Analyst
Pallav Agarwal — Analyst
Pinakin — Analyst
Vikas Singh — Analyst
Parthiv Johnsa — Analyst
Ritesh Shah — Analyst
Rashi — Analyst
Prateek Singh — Analyst
Rajesh Majumdar — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to the earnings conference call of Hindalco Industries third quarter results for FY26. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing STAR and then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Subir Sen, head of Investor Relations at Hindalco. Thank you. And over to you sir.
Mr. Subir Sen — Head of Investor Relations
Thank you and a very good evening everyone. On behalf of Hindalco Industries, I welcome you all to the earnings call for the third quarter of financial year 2026. In this call we will refer to the third quarter financial year 26 investor presentation posted on our company’s website. Some of the information on this call may be forward looking in nature and is covered by the Safe harbor language on slide number two of the set presentation. This presentation we have covered the key highlights of a consolidated performance for the third quarter for financial year 26 versus the corresponding period of the previous year.
A segment wise comparative financial analysis of Novelis and Indian Aluminium and Copper business is also provided. The corresponding segment information of prior periods have also been restated accordingly for a comparative analysis. Today we have with us on this call from Indalco’s management, Mitra Satish Bhai, managing director and Mr. Bharat Goenka, chief Financial Officer. From Novelis’s management we have Mr. Steve Fisher, President and CEO and Mr. Dev Ahuja, Chief Financial Officer. Following this presentation, this forum will be open for questions and answers. Post this call. An audio replay will also be available on company’s website. Now let me turn this call to Mr.
Pai to take you through the company’s performance and key highlights in the third quarter of fiscal 26.
Satish Pai — Managing Director
Good afternoon and morning everyone. Thank you for joining Hindalco’s earnings conf call today. On slide 5 to 10 of this presentation you can see our progress across quarterly metrics of safety and sustainability for this quarter versus prior periods. I will now take you through the key highlights of these initiatives. At Hindalco, safety is always our highest priority. Our ltifr for this quarter is at 0.22 showing significant improvement over the prior period. During the quarter. We regret to report a road safety incident that resulted in a fatality at one of our Indian operations.
We deeply regret this loss and are committed to taking all necessary corrective actions to prevent such occurrences in the future. To further strengthen road safety audits. We are implementing measures to prevent and machine interface risk across all our manufacturing units. Let me now share one good news. Sindalco has scored 89 out of 100 in the S&P Global CSA 2025, the highest ever score achieved by the company to maintain its leadership position in the aluminium industry. This recognition emphasizes our unwavering commitment and comprehensive strategy towards our long term ESG excellence. At Hindalco we continue to make strong progress on circularity and responsible waste management.
This quarter 82% of the total waste generated was recycled or reused indicating stronger waste management performance. We achieved 126% recycling of bauxite residue excluding Utkal, 105% recycling of ash and 126% recycling of copper slag. This quarter our specific water consumption in aluminium has further decreased driven by the installation of an ROZLD plant and tube settler along with runoff recovery systems at Herakur as well as the commissioning of a condensate polishing unit at Utkal Alumina. Additionally, the cycles of concentration optimization projects implemented across 11 cooling towers at Aditya and Irakud have contributed to higher water savings in these units.
In copper, freshwater consumption intensity has also reduced compared to the prior period supported by higher production volumes. We remain deeply committed to preserving and enhancing our biodiversity in and around the areas of operation. During the quarter we planted 70,000 saplings across our mines and plant locations. Of these, 32,000 saplings were planted planted in our mining areas, significantly higher than the 23,000 planted in the previous year. These efforts are expanding our green belt coverage, supporting local biodiversity and enhancing overall environmental quality across our operations. We are also progressing a flagship coastal ecological Initiative transforming 50 hectares of barren coastal land into a thriving mangrove ecosystem.
Further, we have launched a no net loss on biodiversity project across 350 acres in Belgavi, Karnataka. These projects are designed to deliver measurable ecological benefits while empowering local communities as stewards of restoration. At the end of this quarter our renewable energy capacity was at 418megawatts powered by solar, wind and hydal resources. We are on track to adding another 103 megawatts in the following quarter and are well advanced in our round the clock renewable energy initiatives with 130megawatts of storage based power to be deployed this year taking our renewable capacity to 522megawatts by the end of this financial year.
These achievements reflect our commitment to clean energy and reducing carbon intensity as we move towards a greener and more sustainable future. Our aluminium specific GHG footprint for the quarter was at 9.11 tonnes of CO2 per tonne of aluminium produced, which is lower than the quarter period of the last fiscal year. Now let me give you a glimpse of the current broader economic environment on slide 12. IMF expects the global growth to remain steady at 3.3% year on year across 2025 and 2026. This steady performance results from balancing of divergent forces. Headwinds from shifting trade policies are offset by tailwinds from surging investment related to technology as well as fiscal and monetary support and broadly accommodative financial conditions.
The US is expected to grow 2.4% in 2026 assisted by fiscal stimulus, lower policy rates and easing trade related drags. Meanwhile, China is Projected to expand 4.5% Supported by stimulus measures and easing trade tensions. Although structural challenges continue to weigh on medium term performance, the risk to global growth outlook remain tilted to the downside. The main concerns stem mainly from AI investments over corrections, renewed trade tensions, geopolitical flare ups and rising fiscal and financial vulnerabilities. Global inflation is projected to moderate to 3.8% in 2026 from 4.1% in 2025 as softer demand and lower energy prices persist.
However, the US is expected to see a more gradual return to the target. In this global environment, India’s growth momentum remains strong. Real GDP rose by 8.2% in Q2 on the back of resilient domestic demand and strong industrial and services sector performance. The economy is benefiting from supportive factors like GST rationalization, softer crude oil prices and improved financial conditions. Manufacturing activity has held up well in the past few years supported by healthy bank credit flows to key segments. On the demand side, urban consumption is steadily improving while the rural demand continues to hold firm. However, external risks in the form of geopolitical uncertainties and commodity price volatility could weigh on the growth outlook.
Against this backdrop, The RBI projects FY26 growth at 7.3% while Economic Survey forecast FY27 growth in the range of 6.8 to 7.2%. RBI also expects the inflation to remain low at 2% supported by softer food prices and easing crude oil prices with an uptick towards the 4% target in FY27. This gives RBI the room to stay supportive of growth. The monetary policy stance remains neutral, balancing growth and price stability. Moving on to the industry outlook on slides 13 to 15 on slide 13 you can see that the aluminium prices have strengthened during this quarter. The demand conditions remain steady across primary end use segments such as packaging, electrical machinery and transport.
On the supply front, concerns over potential smelter shutdowns and delay in capacity ramp ups continue to support prices. Furthermore, accommodative monetary policy, improved investor sentiment and a broader upswing in commodity markets, most notably in copper, have collectively bolstered aluminium price levels. In calendar year 25, global aluminium production and consumption each grew around 2% year on year to nearly 74 million tonnes, resulting in a broadly balanced market. In China, production rose 2% year on year to about 44 million tonnes, driven by capacity additions in Yunnan, Sichuan and Indo Mongolia, partially offset by rationalization in Shandong. Consumption increased to around 3% year on year to approximately 46 million tons, mainly supported by around 30% surge in new energy vehicle production in China.
Building and construction activities, however, remain subdued due to lower real estate investments. As a result, China closed the year with a deficit of roughly 2.3 million tonnes. In the rest of the world, production grew by around 2% to nearly 30 million tonnes while consumption reached around 28 billion tonnes, up 1% year on year. Stronger demand in Brazil and Indonesia helped balance softer trends in the US I segment. Packaging, construction and consumer durables showed improving momentum whereas transport stayed subdued. This led to an overall surplus of about 2 million tonnes by end 2025. Overall, the global aluminium market remains balanced ending calendar year 25 with a modest deficit of around 240kt, with China’s deficit largely offset by a surplus in the rest of the world.
Turning to aluminium demand in India as shown on slide 14 Q3 FY26 demand is expected to reach 1.5 million tonnes, reflecting a robust 9% year on year growth. Growth remains broad based with autos buoyed by GST 2.0 reform. Strong momentum in solar driven by rising investments and steady demand in packaging. Overall, India continues to outperform the global market, turning to the Indian copper industry on slide 15 in the domestic copper market, demand this quarter, including domestic supply, scrap and imports excluding scrap, rose by 10% year on year, reaching 402,000 tonnes compared to 364 km in the same period last year.
This strong growth was driven by infrastructure investments in increased electrical application and strong sectoral demand, particularly from white goods and winding wires. On the TCRC front, the Chinese smelters have finalized the 2026 long term copper concentrate contracts with Anthopogaster Minerals at $0.00 per pound, underscoring a sharply tightening near term structural deficit in the global concentrate market. In contrast, smelters in Japan, Korea, Europe and India remain in negotiations as they seek more favorable terms than those agreed in China. Notably this year stocks are being conducted separately by Chinese and non Chinese smelters signaling a potential shift away from a single global benchmark towards more region specific pricing.
Meanwhile, in the spot market buying terms have settled around minus 10 to 11 cents per pound reflecting continued supply tightness. Let me now give you a glimpse of our quarterly consolidated and business segment wise performance this quarter versus the same quarter of last year. On slide 17 our consolidated business segment EBITDA was up 6% year on year at 8762 crores this quarter. The consolidated profit after tax was down 45% on a year on year basis to 2049 crores this quarter due to the impact of exceptional items including the impact of the Nobelis Oswego plant fires.
So if we adjust the impact of this exceptional item, our consolidated plat would have been 4,051 crores this quarter up 8% year on year versus the prior period at Hindalco India Business our business segment EBITDA rose by 10% year on year at 5,660 crores this quarter whereas our quarterly profit after tax was at a record 3581 crore up 24% on a year on year basis this quarter. Coming to our business wise performance this quarter the India upstream aluminium shipments were up by 2% year on year while revenues were up 6% year on year. Our quarterly EBITDA was up 14% year on year at 4832 crores backed by our resilient performance across the value chain fully aligned with our philosophy of operational excellence by design.
This helped us deliver an EBITDA of $1,572 per ton this quarter. EBITDA margins were at 45% and continue to be among the best in the global industry. Our hedging position for aluminium in the fourth quarter of FY26 stands at around 64% on the commodity at $2,807 per tonne and 26% in the currency at 88.18 rupees per dollar. Our Indian downstream aluminium business continued to deliver a strong performance where quarterly shipments were up 9% year on year. At 108 KT. Aluminium downstream delivered a quarterly EBITDA of 233 crores, up 55% year on year versus 150 crores in the prior period.
This was driven by higher volumes, product mix and premiumization. The result in EBITDA per ton stood at $241 a ton higher by 35% year on year this quarter. On Hindalco’s copper business performance, our overall metal shipments were up at 122kt, up 1% year on year of which CCR volumes were at 82kt, down 14% year on year due to weaker domestic market on account of higher LME and higher channel inventories. Our quarterly copper EBITDA stood at 595 crores down 23% year on year on account of lower TCRCS and copper concentrate mix offset by better realization in by products and operational efficiency.
Novelis recorded shipments of 881kt after adjusting for 72kt lower shipments due to Oswego fires, reflecting a decline of 3% year on year over 904kt shipments in the same period last year. The adjusted EBITDA stands at 436 million which is $495 per tonne, up 22% year on year excluding the impact of 54 million from Oswego fire and 34 million from tariffs this quarter. Back in April 2025 we had set an FY26 exit savings run rate target of $75 million which we raised last quarter to $125 million. With another quarter of solid execution behind us. That run rate is now 150 million as we accelerate all cost efficiency initiatives looking ahead, we remain committed to our three year goal of permanently reducing our cost structure by 300 million by FY28 exit.
Additionally, scrap prices continue to move in a positive direction, supporting margin improvement coming to slide. 20. Hindalco at the consolidated level continues to maintain a strong balance sheet with net debt to ebitda well below 2 times at 1.73 at the end of December 2025. Underlying cash generation momentum from our businesses is strong and we continue to invest in growth projects in line with our capital allocation policy. Despite the temporary impact of Oscilligo fires, we remain committed to maintain our net leverage around 2x at the consolid level. During the quarter, Hindalco’s Wholly owned subsidiary AV Minerals raised 800 million at SOFR plus 105 basis points.
Of this amount, 750 million was infused into Novelis as equity in December 2025. Additionally, on 10 February AV Mineral upsized the facility by a further 200 million at the same pricing. This additional amount will also be infused as equity into Novelis during the current quarter. Details of operational and financial performance in each of our business segments this quarter compared to the corresponding period of last year as well as the previous quarters are covered in further slides and annexures to this presentation. Let me now conclude today’s presentations with some key takeaways in Slide 27 and 28 at Novalis.
Our third quarter results underscore that the fundamental drivers of our business remain strong even as we navigate through the current challenges of tariffs and the restart of Oswego facility post fires in Q3 FY26. Excluding these impacts, our underlying adjusted EBITDA per run would have been nearly $500. Our Oswego Hot mill is expected to start in late Q1 FY27 Oswego outage impact is primarily a timing issue, a headwind this fiscal year that will largely be recovered in the next financial year. Our long term guidance of $600 per tonne remains intact as we advance on accelerated pace in our 300 million structural cost reduction program driving sustained improvements in operational efficiency and margins.
Our Baymanet 600kt greenfield rolling and recycling facility is scheduled for completion this year to meet growing customer demand for automotive, beverage packaging and aluminum specialty products coming to our India business. In Q3 FY26 we delivered a global industry leading aluminium upstream EBITDA per ton reaffirming our position in the first decile of the global cost curve. This performance reflects our strong operational efficiency, cost discipline and consistent execution. Our key upstream expansion projects of Aditya Lumina refinery and aluminium smelters are progressing well and remain on schedule as we move ahead with our objective of doubling down on our upstream capacity.
Our captive mine coal mines of Chakla, Meenakshi and Banda coal mines shall lower upstream costs leading to higher EBITDA margins on the downstream fund. The ramp up of our Aditya plant is now contributing meaningfully to the scale up of overall FRP production. Our battery enclosure facility has achieved full ramp up and is operating at optimal level. Commissioning activities are commenced at both the Aditya battery foil unit and and the Taloja AC Fin facility. In our specialty alumina business precipitated hydrate facility is expected to be commissioned in Q1 of FY 2027. Our copper business remains resilient with the copper smelter inner group tube E waste and recycling projects being on track, reinforcing our commitment to sustainability driven growth.
Nindalco is future ready and steadfast in its core philosophy of engineering better futures. Our strategic priorities are clearly defined accelerating capacity expansion across the aluminium and copper upstream businesses while driving a fourfold increase in downstream EBITDA in India by FY30. Concurrently, Novelis is progressing its mid to long term three by 30 strategy anchored on three key priorities to deliver sustainable growth and enhance profitability by 2030. Together, these commitments position us strongly to capture emerging opportunities and create long term sustainable value for all our stakeholders. Thank you very much for your attention. And the forum is now open to any questions you may have.
Questions and Answers:
operator
Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and then one on their touchstone phone. If you wish to remove yourself from the question queue, you may press star and then two. Participants are requested to use hand fits while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles again. To register for a question, please press star and then one. Our first question comes from the line of Ashish Kejriwal from Nuama Wealth Management. Please go ahead.
Ashish Kejriwal
Yeah, hi, good evening. Thanks for the opportunity. So three questions for me. 1. Is it possible to explain the net debt bridge? Because we saw that net debt has increased by almost 18,000 crore on a quarter on quarter basis. So we understand that $0.4 billion was on novelist and then $750 million we have paid to novelist. So roughly around $1.2 billion we can understand. But what about $0.8 billion extra? So first question is on reconciliation of net debt bridge.Please let me get Bharat to take you through that. Bharat.
Satish Pai
Yeah. So if you look at. For the, you know, for the first nine months the net debt has gone up by 24,000 crores. And as we discussed in the Novelist call yesterday the nine month FC ETF for normally for the negative $1.7 billion.
Ashish Kejriwal
Sir, is it possible to share on quarter. On quarter from second quarter to third quarter.
Satish Pai
Yeah. So let me just give you the nine month picture and then from there I’ll. Three months. So that $1.7 billion translates to in INR terms around 70,000 crores. You know, because there is a. There is an exchange rate difference on the opening balances. So 17,000 crores really came in from the Novelist FCF which was a mix of the OTSEGO impact around $485 million, the higher CAPEX in bay minutes as well as the increase in material price that is the LME driven price impact on the working capital. So that’s on Novelist, the India business. The. The net debt increased by around 7000 crores which was coming really from the copper business players because of the increase in the LME as well as some increase in stock because of the concentrate arrivals. The net Debt increase was 7,000 crores. But in Q4 we are confident of liquidating or reversing that part of the copper increase. But overall this is the breakup of the 24,000 crores of increase in at that so largely working capital requirements for copper concentrate in India which will reverse in Q4. And on the novelist side it was really driven by the cash flow requirement on the novelist fire.
So we had to use the ABL line as David told yesterday.
Ashish Kejriwal
Yeah, but no, as novelists have mentioned around $0.4 billion incremental net debt from Q2 to Q3. And on that $750 million we have paid as an equity which I can consider as net debt position. So 750 plus 400 which is around $1.15 billion. Let’s say another. I don’t know how much working capital is involved in copper concentrate. But still after making so much profit our net debt has increased by almost $2 billion. So I’m unable to reconcile that.
Satish Pai
Yeah, so on this 18,000 crores, I think the broad backup is the 18. In the India business there was a 4,000 crores because of the copper working capital will get reversed. And in case of, and if you look at in rupees thousand crores what happens is the opening net debt also gets reconverted from dollars into rupees, you know because of the forex impact on the opening. So, so 14,000 crores was the impact which came in from the novelist FCA for the quarter.
Ashish Kejriwal
Okay, okay, okay. Secondly in sir hedging you have said Q4. What was the hedging loss in Q3 and anything on FY27 also we have hit.
Satish Pai
So in I think in Q3 the hedging I wouldn’t say loss but the notional loss was a 245 crores. And in FY20 we have now hedged about 21% at 2925. And just to we will take it up to 25% at the current 3100 levels. We are trying to catch it. So we will probably be around 25% at about 3,000 by the end of March. That’s our plan.
Ashish Kejriwal
Understood. And so lastly on account of our EBITDA per turn, when I Look at last 3/4 EBITDA per ton on aluminium, I’m including both upstream and downstream, we are getting EBITDA per ton of something like 1550, $1560 per ton which is hardly any increase in last three quarters despite the fact that LME prices have increased by more than $300 per ton. So Partly we understand because of hedging, but still it’s difficult to look at that when LME prices have increased by around $400 per ton. But our EBITDA does not have any, you know, any change in that in last three quarters.
Satish Pai
Yeah, so I think that when you look at it, you have to get. See the Upstream EBITDA in Q1 was 1467, in Q2 it was 1521 and Q3 is 1573. And you also have to go back and look at my commentary because we have along with that the specialty alumina EBITDA that when we sell we add and you know, by from Q2 to Q3 there was a sharp drive drop in the alumina prices. So and if you look at my commentary in Q2, we had also got the RPO benefit which I talked about in the cost.
So there are many besides the thing, there are a couple of moving parts which I try to be as transparent when I do the quarterly calls. So if you go back and reconcile all this, you will see that the pure upstream part has been going up. The cost of production has been about one or two points higher as we have gone along the quarter.
Ashish Kejriwal
Okay. Okay, thank you so much and all the best.
operator
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the conference, please limit your questions to two each per participant. You may rejoin the queue for follow up questions. Our next question comes from the line of Pallavagarwal from Antique Stockbroking. Please go ahead. Pallav. Sir, your line is unmuted. Please proceed with your question. Yeah, good evening sir.
Pallav Agarwal
Am I audible?
operator
Yes, you’re audible now. Yes.
Pallav Agarwal
So the first question was significant rise in copper prices. Are we seeing any substitution happening from copper to aluminium?
Satish Pai
I think that broadly you can say that wherever possible the substitution has been happening over the last few years already. So long distance conductor cables, many wiring systems have been switching to aluminum, but it’s not in the last water. But of course there are certain applications where copper still holds. And that’s why if you look at electrification, you look at electric vehicles, motors, harnesses, there the copper demand remains extremely strong. So some amount of substitution has been happening over the last two years from what we have seen.
Pallav Agarwal
Sure. The other question, you know, with CBAM coming in, you know, what proportion of aluminum exports are exposed to Europe? And you mentioned some level of emissions. That we have, you know, so are. Those in compliant with what the guidelines. Are for the seabam?
Satish Pai
So look, one thing you have to realize in aluminium, sea band power is not included right now. So the Indian aluminium carbon per ton is no different from Middle east, no different, different from anywhere else because power is not a part of seabam yet. So till that gets included, the CBAM is not a restriction for any Indian aluminium imports. In fact, I’m little bit positive with the current trade unit agreement that has been signed because I think that exporting to the Europe will become more attractive for us. Us.
Pallav Agarwal
Sure. So lastly, you know, if you could just also give us a guidance on the fourth quarter, you know, cop. Will there be an increase in caustic, etc.
Satish Pai
I think that we are expecting fourth quarter cost to be about 1% higher, largely driven by CPCO. CPCO crisis, which, you know, which goes into making the anode has sharply risen due to, you know, what’s happening, I think demand and supply in China. So we are expecting cost to be about 1% higher in Q4.
Pallav Agarwal
Sure, sir. Yeah, thank you so much.
operator
Yeah, thank you, thank you. Your next question comes from the line of Pinakin from hsbc. Please go ahead.
Pinakin
Yeah, thank you very much. Question on novelist, there is 180k volumes which have not been contracted at bay minute and they are for the auto segment. So just trying to understand, given the Oswego fire, given the disruption it has caused to the largest customer of nomolis, when would this, you know, volumes for the auto sector be contracted? Is there a risk that these volumes are not contracted till Oswego is fully up and running well into next calendar year?
Satish Pai
Yes, Steve.
Steve Fisher
Yeah, thanks for the question. And again, so obviously OEMs are continuing to contract because they’ve already made choices as to their material on their vehicles and will have started production dates over the next several years. We’re very positive on our bayonet progress and the commissioning in the second half of this year. As we said before, we feel really comfortable about the overall contracting as we ramp up the overall plant over the timeframe of 18 to 24 months. We also think as OEMs look at the fire and think about risk management. I think, you know, first, aluminum has significant advantages.
Lightweighting for strength to weight ratio, better agility, better braking, better higher payload, towing. All these benefits have to go under their decisions, especially on the larger vehicles in the North American marketplace. And from a risk management standpoint, Novelis will be the only aluminum provider with three hot mills capable of providing these technically sophisticated products, both beverage packaging, automotive and then also specialty product sheet as well as well as multiple locations of Finishing capacity at both Guthrie and at Swigo and Kingston. So while everyone will be looking at their overall portfolios associated with the Oswego Fire, the growth that we continue to see because of the attributes of aluminum advantages aluminum brings, we still see the growth and we think Novelis is in a very strong position to continue to capture that growth and contract into it.
Pinakin
Sure. So do you expect to contract these volumes in calendar year 26?
Steve Fisher
A combination of already contracted 26 and 27.
Pinakin
Got it.
Satish Pai
By the way, Pinak. And it’s not such a bad thing at this point in time to have open capacity because you know there could be portfolio and pricing opportunities because overall the North American markets are in a pretty good place from a demand supply balance perspective. So having some open capacity is actually a good strategic may turn out to be a good strategic opportunity. So it’s not like a concern or a bad thing in the market conditions in which we are.
Pinakin
Got it, Got it. Thank you. My second question is for Mr. Pai. Now we understand that some of the net debt would reverse as the working capital gets released. But given there was a past Capex cycle, aluminum prices did not do well and Hindalco’s debt had surged at this point of time, the cycle is slightly different. But given what’s happening at Novelist, would the company look at pushing out or delaying some of the Capex programs either at Novelist or India in the course of current day 26?
Satish Pai
So the way we are looking at that, and that’s why in the prepared remarks we are sticking to our commitment of 2 or below at a consolidated EBITDA level. And I think that that’s the only way I can answer because the Novelist Capex is largely bay minute after that, you know, they’re going to go on a deleveraging cycle. And the India Capex, the projects that we have, you know very well we are going to be spending around 10,000 crores a year, which is right now for the next two years. I don’t see a problem with the cash that we have.
But if we can or do get into trouble, we will take the decision so that the consolidated debt to EBITDA does not go about. I think that’s the best way I can answer.
Pinakin
Got it, got it. That’s very helpful. Thank you very much, sir.
operator
Thank you. The next question comes from the line of Vikas Singh from ICICI Securities. Please go ahead.
Vikas Singh
Good evening sir and thank you for the opportunity. So my first question towards Novel is since we are buying these labs from outside and to meet the customer Requirement, had the insurance covered the additional premium or the cost which we are paying from the buying slab from outside as well, or is it over and above what we have estimated in terms of. The hit we have to take?
Satish Pai
Yes. So the insurance does cover the cost of all the external sourcing that we are doing. That is part of the policy.
Vikas Singh
Noted, sir. So my second question pertains to the Bay Minute expansion. While I noted that we have spent only 54% of the capex till date and our starting time is second half, Cyber 23 is probably hardly six months down the line. So is the project is being delayed or how should we look at the aggressiveness of the capital capex basically in. The next six months?
Satish Pai
Because I’m confused that you would be able to spend that, even that assuming 15 to 20% payment after the commissioning, 30% in next six months, spending would be pretty high, which would reflect on. Your debt as well.
Vikas Singh
So are we confident of commissioning it on time now?
Satish Pai
Absolutely. And so the cash flows reflect exactly the way things should be. Now we are in a phase where, you know, you will see an acceleration. There has already been some acceleration of the, of the cash flow and it will keep happening as we approach our commissioning dates towards the later part of this year. So there is nothing abnormal about the way the cash outflows are going and it is not just because of the percentage. It is not indicative of any slowness in the projects. You see right now we are in an intense construction phase and therefore this is where we need to pay contractors because they need to pay the labor.
So so as you get into this intense construction phase, cash flows rightly tend to accelerate. But I don’t want you to kind of think that just because, you know, we are at 2.7 billion, there is some slowness in the project versus the projected cost of around 5 billion. Not at all.
Vikas Singh
Not yet, sir. And sir, just lastly, since next six to seven months, basically most of this. Two billion dollar of Bay minute would be spent even after the copper working capital getting diluted.
Satish Pai
We could expect the overall debt levels to remain at current levels or you. Are expecting on a consolidated level level. It should be coming down. I think they just answer on the novelist debt side and I’ll take it here. So let me clarify something. It is not like all the cash flows will go completely out at the time of the commissioning. No, the cash flows will lag the commissioning. So I want to be clear about that. The cash flows will go into the next calendar year, even up to, let’s say, sort of beyond the first quarter of next calendar year. So please don’t assume that all the 5 billion is going to be out by the end of this year. Okay so I just want to clarify that and before I hand over to Satish, just want to clarify that once we complete bay minute our deleveraging cycle starts almost immediately after that.
So basically you know, after fiscal year 27 we enter, from fiscal year 28 we enter the deleveraging cycle because this is really what is speaking our cash flow, cash outflow. So just two things to note and. Look on the India side the net debt, the gross debt will not go. So right now we have got long term debt and short term where the working capital requirements that Bharat mentioned we have taken but that will reverse as the copper concentrate is consumed in Q4. So at India level there will be no increase in debt. Again I repeat, the overall way to look at it is that on a console level we’ll try to keep that growth net debt to EBITDA around 2. Noted sir.
Vikas Singh
Thank you. And all the best.
operator
Thank you. Your next question comes from the line of Parthiv Johnsa from Anandraathi. Please go ahead.
Parthiv Johnsa
Hi, thank you for the opportunity. Just continuing on the debt question, you know, considering yesterday’s call on you know, Adnobilis, you already have a net debt of about 6.2 billion. Considering you have some undrawn limit and which you will be drawing for working capital and also I agree that you just clarified that there will be a certain lack to, you know, push out the capex amount going forward. However, just considering next say six months or nine months is it possible to quantify the net debt at no less can we assume that grow, you know, going to about eight and a half billion or nine number because yesterday on the call you said that the, you know, the leverage would actually go towards the higher end of the forex basically.
Dev Ahuja
So I clarified yesterday on our call that from a net debt to EBITDA perspective we will go into the, we will go into the high force and yeah, I want to be clear that our debt levels could be going up, will be going up further from this point in time and they could be, you know, for a period of time until the insurance recoveries come, they could be going well above levels of you know, sort of high 8 billions that is going to be timing and as the insurance recoveries start coming we would quickly see that falling below 8 billion.
I would say even by the end of FY27 our gross debt could kind of be sort of coming towards 8 billion or below 8 billion after going much higher than that into the high eights. So yeah, there will be an increase in short in the gross debt for a while.
Parthiv Johnsa
Yeah. So just mentioned that your consolidated debt will be around. You’ll not try to surpass two in you know, on the media medium term. But considering insurance would take about 18 to 24 months, which was pointed out again yesterday on the call, would it be fair to assume that that actually the threshold would surpass in 27 and say mid of 28 considering we’ll be surpassing 8 billion of net debt in novitis.
Dev Ahuja
I think that I said this.
Satish Pai
No, I think Dave, I think the point that we will have to look at is how post Oswego startup how this thing develops because the net debt to EBITDA of course takes into account the trailing twelve month ebitda. I think what Dave is trying to give you is the absolute levels of debt. So I think that you know, to take your point, is it possible in one quarter that it may go above. Fair enough. But I think that what we are trying to give you is a sort of a little bit of a longer term perspective.
Over a year there will be and can be some amount of spikes or so during a month or a quarter but you know there are pluses and minuses. We are quite hopeful that Oswego will start up. So I think you will just have to bear with us over the next six, six months as we get through this issue of getting those figures startup.
Parthiv Johnsa
Sure, that’s helpful. So my second question is pertaining.
Dev Ahuja
Just to be clear, you know, when you say insurance monies will take, you know, a longer time, it does not mean that everything just comes all at once. That’s what I clarified yesterday that insurance payments keep coming progressively and we are working very closely to make sure that we do everything to accelerate those payments. We already started getting some monies and so you should not think about insurance monies as something that will all come at the end of 15 to 18 months. That’s not a right assumption.
Parthiv Johnsa
Okay, sure. So my second question is pertaining to Bayminut. Now when we announced Bminet a couple of years back, the entire macros, especially in us were quite different. Right. And purely for that reason we’re able to contract almost what, 70% of the volume. When the second escalation of CapEx happened there were a couple of reasons being given that, you know, there’s some civil work escalation which has happened and so on so forth. How confident are we to take up the next phase of expansion of say going from 0.6 to 1.2. And also considering the global macros, what is the kind of IRRs you are expecting beyond 28? Because I think 27, you are not expecting any volume.
28 will start, you know, volumes. You can expect volume from bay minutes from 28. But just want to get your longer term perspective on this.
Satish Pai
Yep. So, All right. So again the IRR picture, we wouldn’t be just below double digits. We will be covering the cost of capital. And so from the point of view of, you know, does the project still make good financial sense? The answer is clearly yes. It will be accretive in a very nice way to the EBITDA story and it will be a key enabler for us to get to that over $600 per ton EBITDA which, which Satish earlier alluded to.
Steve Fisher
As far as the macros, we still are very confident the drivers of demand, especially in beverage packaging. I talked about automotive earlier. So we’re still very confident that the overall supply demand picture with Bayman at first phase and ADIS aluminum expansion in the US will bring further opportunities for phase two by the end of the decade. And of course we talked before that in the second phase, the utilization of the hot mill with the second cold mill is very accretive from a return perspective. But nothing to announce as far as timing or anything at this point in time.
Parthiv Johnsa
Sure. But when we speak about a $600 or a $525 kind of an EBITDA number in medium to long term, a couple of your competitors, global competitors, I’m not particularly the your US competitors, but global competitors have already surpassed a $630 kind of a number last quarter. Is there a place where, you know, is there a room for improvement? Just wanted to understand where are we lagging or where what can be done to, you know, reach that $600 number in as fast as possible.
Steve Fisher
We stay committed to the building blocks, to the $600 per ton. Long term we would have to understand which competitor you’re referring to that they might have a very different product mix from us, but from the underlying efficiency of our business, the target that we’ve set is a very strong operational performance and very much on the back of $1,000 plus per ton of EBITDA coming off of the pavement up project itself.
Parthiv Johnsa
Yeah, thanks. And just, just one request you used to give, yeah, just just quickly. You used to give the global, you know, deficit and surplus for aluminium copper if possible from next quarter, if you can Give. That would be really helpful.
Satish Pai
I did give the global.
Parthiv Johnsa
No, the slides. Basically the slides. The slide. Oh,
Satish Pai
okay. Okay. All right, we’ll give that.
Parthiv Johnsa
Thank you.
operator
Thank you. Your next question comes from the line of Ritesh Shah from investech. Please go ahead.
Ritesh Shah
Thanks for the opportunity. A couple of questions. One is how should one understand the. Capital structure at Novaris? I understand it’s the equity injection of 750 plus incrementally 200. So how should we understand that and what is the plan to with EPAY this 950? That’s one second is why did we come to this number of 750 plus 200? And what gives us confidence that there won’t be need of anything beyond this 950? If you could put that into context with the covenant that we have I think 2032 term loans, which I did, that’s 3.58 secure net leverage. Does it necessarily mean that there won’t. Be further need of inclusion and any comfort over the liquid providers? That’s the first question.
Steve Fisher
You want me to take it?
Satish Pai
Yeah, take it. I mean. Yeah.
Steve Fisher
Yeah. So let me try to answer all parts of your question. So we are looking at 750 and potentially another $200 million of equity infusion. Now what is the thinking rationale logic around it? Essentially this is going to go towards funding the announced higher cost of payment that is from 4.1 billion to around 5 billion. That is essentially the logic behind infusing this equity between us and our parent. We agreed that it is not good to go into the debt market to fund this increase. Now this would have in the normal cause happened at a bit of a later point of time.
But given what happened with Oswego and we will have a 1.3 to 1.6 billion gross outflow until insurance money comes. This also now becomes a bridging money to a very large part to be able to really fund that short term need and then insurance money will start coming in and it will basically. Once again the point is it will basically eventually go towards May minute. Now I want to be clear that during the year there could be some timing challenges and those timing challenges we will solve by using some short term working capital or structured financing facilities.
As I have been saying even yesterday at our call, the only debt that we will go for externally now will be the planned debt raise of another 500 million. That should happen between now and the middle of the year and that was planned debt. In short, in terms of how we will manage the capital and the Structure we are not going to be going down to raise any more debt other than the already planned debt that we would have raised. I hope that that is helpful.
Satish Pai
Yeah, just a follow up. So this 750 plus 200 what we have raised what. What’s the cost of fund over there and is there a tenure? Because for insurance you indicated that the money can continue to trickle in. So is there a timeline on the 750 plus 200 to be entered? Yeah, it’s five years. Yeah. So the cost is so far 105 bips. Sir. I couldn’t get you. Sorry. Yeah, it’s so far plus 105 bips.
Ritesh Shah
Okay. And the tenure? Five years. Perfect. And would it be possible for you to indicate what is the overall cost of debt at Noelis and how are we looking at the cost of capital at Novales? The reason to ask this question is. When we look at payment and when. We indicate that we are comfortable on. Covering the cost of capital.
Satish Pai
Just trying to play around the numbers over here.
operator
Sorry sir, the line for the Nova Loops management has been disconnected. Please hold on a moment, I’ll get the line reconnected.
Satish Pai
So just maybe we’ll. When Dave comes on he’ll answer that question. But let’s go to the Mr. PI in the interim if I, if I can just ask a question like why the tenure of five years for the return of $950 million and do we have adequate comfort that this number won’t go beyond 950? Because there is a covenant which is there which says 3.58. So looking at the cash flow profile I think the denominator is adjusted ebitda. But are we comfortable, confident that there won’t be further need beyond this 950? No. I mean I think that right now we are looking at the situation and the way we have modeled it we are fairly confident and I think that you know a five year tenure is fine because we really believe that the next six to eight months by the time we get Oswego back up and running and bay minute commission we’ll all be talking something quite different.
So the next six to eight months is our critical period and I think that we’ll be out of the woods then. Sure, I’ll wait for the answers on Kotk.
operator
Yes sir. The line has been reconnected, sir.
Satish Pai
Yeah.
Satish Pai
The cost of capital of novelist was his question.
Steve Fisher
Yes. So the cost of capital of novellas is in the mid eight.
Satish Pai
And the cost of debt. Sorry.
Steve Fisher
The cost of debt, the weighted average cost of debt would be somewhere around 5.3%.
Dev Ahuja
Yes.
Satish Pai
Perfect. And last question. The debt maturity profile for 6.2 or the gross number if you could just help. No or less. That would be free.
Steve Fisher
You’re talking about novellas maturity profile.
Ritesh Shah
Yes.
Steve Fisher
Most of it is towards the end of the decade. We have no early maturities after we did, after we did the last refinancing of the 750 million in September last year. Our debt maturity profile is now approaching towards the end of the decade. The only renewal that we can talk about is the ABL renewal which will happen in the middle of this year. But we are very comfortable with the maturity profile of our debt.
Ritesh Shah
Thank you so much. Thank you.
operator
Thank you. Ladies and gentlemen, we request you to limit your questions to two each per participant as there are several other participants waiting for their turn. Our next question comes from the line of Rashi from Fiti. Please go ahead.
Rashi
Thank you. Just a couple of questions. On the Capex side we have an idea of the Novenous capex. So for India, what has happened so far in the nine months? What is the target for this year and next year?
Satish Pai
Yeah, so this year our target is Sabah. We’ll be finishing the year at around 8,000 crores. And you need to add to that the 2,000 crores we paid to get the Banda Mai. So roughly this year will be 10,000 crores. And next year we also will be in the same range about 10 to 12,000 crores. Because the Aditya refinery recycling plant projects will be going. So that’s the next year’s forecast as well.
Rashi
How much have we spent in the nine months?
Satish Pai
In nine months we have spent about 7,000 I think. So we’ll be finishing the year. Not seven, I think it’s about six. We finished the year at 8,000 plus the 2,000 of Banda which we will take it to 10,000.
Rashi
Got it. And what is in the current split of the 59,000 crores of net debt? How much net debt is on India books?
Satish Pai
India is a negative 4,000. You’re talking about gross or net? Because net in India is negative. Negative 600 crores.
Rashi
600 crores of cash on the India books. Thank you. And on the just one question on the cost side, this quarter your cost also went up by 1%. And next quarter also you’re expecting a 1% increase.
Satish Pai
Yeah, this quarter. Just let me now clarify. Last quarter when I talked about the cost, I said that the cost had a one time impact of an RPO reversal. If you, if you look at it quarter on quarter. The way it stands it’s 2% up this quarter versus last quarter. But if you take off that impact of the RPO that I mentioned in the last quarter the cost was flat.
Rashi
Understood.
Satish Pai
But I think you will see it real numbers. It’s 2% higher because last quarter had a one time write back of the RPO that I did mention in the script.
Rashi
Has there been any delay in the chakra line? I think earlier we were talking about a start end of FY26 and now the presentation is saying the first half of FY27.
Satish Pai
So we are still trying to get the certain clearances sorted out. We thought we would do the box cut in January. The box cut now looks like more likely like April. So yes, there has been about a quarter delay.
Rashi
All right, thank you. And just last question. Alumina sales for the fourth quarter expectation.
Satish Pai
Alumina sales for the fourth quarter should be around 170 to 180kt. We did 160 in Q3.
Rashi
Got it. Thank you.
Satish Pai
Thank you.
operator
Thank you. Our next question comes from the line of Prateek Singh from IIFL Capital. Please go ahead.
Prateek Singh
Hi, thanks for the chance. Much of the Hindalco India questions have been answered. Two questions on novelists. First, given record high scrap spreads in North America right now want to get a sense as to when they will start reflecting in North American city on a lot of for high cost scrap inventory. And if you could just help us with what is the recycled content in North America. I mean we talk about 63% across the globe but most of the sector content in North America that’s something which can help us add the benefit on monthly basis.
Steve Fisher
The line was not very clear. We were not able to fully hear the questions. We only got some words. Can you just translate the question for us? The line was not good.
Prateek Singh
I think the big question was he was asking when will the EBITDA percent of North America increase and what is the recycled content in North America? If I got it right? Yeah. So increased the scrap spreads are quite high right now at record highs because of the Midwest premium in North America. So when would that start reflecting?
Steve Fisher
Yeah, so they are reflecting but the point is that our ability to use scrap in North America today is impaired because of the Oswego plant being down. So had it been a situation where we were under these pricing conditions, had we been fully up and running, we would have seen some very, very nice, some very very nice impacts from the current metal prices and therefore the scrap spreads. But we are being impaired by that. Now, if I were to say in Q3, despite not being able to use the scrap volumes that we would otherwise, you know, have done as compared to the previous year, same quarter, because of the high metal prices and the resultant spreads, we are still in a pretty good place on an overall metal.
On an overall metal performance. Right. So that is something that I just want you to know now at a company level, you know, we are still at a recycling rate of around 60, 63%. So we are still at that point. Of course North America is lower, but then it is not right to look at North America in this situation. It does not, it does not represent the reality.
Prateek Singh
I understand right now North America might be lower, but let’s say before the Oswego incident, what was the recycling content in North America? Very bulk up numbers.
Steve Fisher
It is pretty much close to the company average, you know, I mean it will be very close to the company average which is around 63%.
Prateek Singh
And the second question is your cost of service this quarter because of oswego was around $186 million. Assuming that 20kt volume impact, that comes to around $9,000 per ton. I’m not sure if my understanding is correct here, but safe to assume these will be lower on a pertinent basis going ahead, given now you had time to optimize supply chains and the Midwest premium arbitrage also kind of now facilitates imports. So is that understanding how we should look at it?
Steve Fisher
You’re talking about several things together. I’m not really sure how I should address the question, but let me try my best. I don’t know the 20kt that you talked about. The 20kt is. I mean the impact of the OSWEGO Fire is like 72kt right now as we are undergoing Oswego remediation. You know, I mean the fixed cost of Oswego are now not reflected in the ebitda. Until the time Oswego comes back, we will be reflecting Oswego costs below ebitda. And you can look at our filings. I mean all the numbers are there in the filings.
But basically we have reclassed about 61 million as idle costs below EBITDA. But honestly it is not a great time right now because of the distorted situation from Oswego shutdown. For the time being, it’s not, it’s not a good time to really make any conclusions from the cost structure. Because we have reoriented supply chains. We are producing material in different regions to supply to North America. Net net. I mean I think that as a reminder, if you really exclude the impact of all the different ongoing events and just look at where we are on an EBITDA per ton basis, the underlying is 495.
Last quarter was around 506. So minus the noise, our cost structure, EBITDA per tonne is in a pretty good place.
Prateek Singh
Dave, the question is more on the cost to serve. You were just saying going forward, how do you see the cost to serve versus Q3?
Dev Ahuja
Okay, so the cost to serve will steadily continue like we have seen in this quarter. And so that’s the best estimate that we have right now. Now, depending upon the timing of the sourcing, you know, when we are able to actually procure the material, there could be. There could be some timing differences. You know, it could be a little bit higher, you know, as compared to the current run rate. But a lot of it depends upon, you know, the logistics and the ability to have the material coming in for the time being. I mean, I would ask you to kind of just think that the cost for Q4 cost to serve will be on similar lines or a little bit higher as compared to quarter three.
Look at. Yeah, so the idea was that in Q3 you would have faced two things which you may not face in Q4. Q3, obviously you would be desperate to procure material. That supply chain might be becoming more streamlined right now. And second, the Midwest premiums right now at 72% are much higher than the so imports may not be as costly versus Q3. So Netmet on a product basis is cost also widely should be going down. So that was the point of the question. But I get what you said, no? Yeah. And so to be clear, the cost. Of serve, actually the amount that we’re bringing in increases in this quarter and next quarter compared to the December end quarter. Why? Number one, we had finished good inventory both at the OEMs as well at Oswego, when the second fire occurred, we did not have any more finished goods inventory. We were hand them out as was the OEMs. We’ve created those supply chains through the first fire that now are stable and actually will bring in more hot band in Q1 Q2 of calendar 2026. So cost to serve, the quantity in KTS will increase. Yes, there is potentially some offset with higher Midwest premium, but the overall dollars will increase in the next couple of quarters.
I think that if you take. Yeah, yeah. I mean, I can make it a little bit simpler for you. It would be okay for you to kind of assume the overall run rate you know, net income impact to be on pretty similar lines as we have in Q3 with all the puts and takes. So you know, we can make it simpler if your intention is how do I model? So that’s one input that I can give to you. You can take a pretty steady number comparable to what was in Q3 on an overall basis.
operator
Sorry to interrupt. Sorry to interrupt your return. Thank you. Our next question comes from the line of Rajesh Majumdar from 361 Capital. Please go ahead.
Rajesh Majumdar
Yeah, good evening sir. Thanks for the opportunity. So one question on Novelist and one on standalone 11% volume decline in Novelist in this quarter. And if you go by the history, normally 4q and 1q are heavy quarters for the company. So. And you hinted at yesterday’s call at some mitigating measures to external suppliers at all in terms of how to address the customer volumes. So will we see a similar kind of volume decline in the coming two quarters before our hospital is up or will we see some kind of reduction in the decline due to mitigating measures? And a follow up question, at what cost will it come? Will it be more margin dilutive?
Dev Ahuja
Yeah. So the volume impact was 72kt in this quarter. You can expect a pretty much similar volume impact because of Oswego in the fourth quarter and that is net of sort of the production loss. So the net volume loss that is low production less all the procurement that we are able to do, we will be pretty much close to 72kt. And quarter four is always one of the peak quarters that we have. So you are right to think that in quarter four we will see significantly higher volumes as compared to quarter three. But I’m just trying and we don’t give you quarter by quarter forecast in any case.
But all that I can tell you is that it is very safe to assume that the impact on volume from oswego in quarter four will be similar to quarter three at around 70kt.
Rajesh Majumdar
Right. And the mitigating measures you suggested yesterday on in terms of getting material from external supplier etc. Will that kind of contribute to some kind of volume addition and at what cost will that be.
Dev Ahuja
Implication? That’s what I’m saying that you know, I mean the net impact will be 72, which includes all the mitigation measures that we will be taking. So based upon the mitigate, based upon the the impact net of mitigation measures, we will have a similar net impact of 72 kat, that includes the mitigation.
Rajesh Majumdar
And on the price on the EBITDA more impact on the EBITDA will be similar.
Dev Ahuja
So the EBITDA will be again, you know, the impact in fourth quarter will be a little bit higher. I mean, you know, third quarter was as you know, net 54 million. This could be more in the 60 to 65 million in the fourth quarter on EBITDA. That’s the guidance I can give to you.
Rajesh Majumdar
Thanks sir for the clarification. And one question on the India business is that you mentioned in your PBT that there’s some kind of demand destruction happening on the copper side because of the price rise. And from 3Q to 4Q we’ve seen an even further increase in the copper prices. If we were to combine that with the lower TCRCs, could we see a kind of combination by which our EBITDA from the copper business can fall substantially into say half the peak levels we ever achieved? Yes, some clarity on that. Thank you.
Satish Pai
I didn’t talk about any demand destruction of copper. I think that Q3 volumes are a bit low because it was the Diwali season and the copper prices sharply ran up. So people just ran down a bit of inventory. In fact we are predicting Q4 will be an extremely strong quarter for copper. Demand is very strong and the EBITDA guidance of the 600 crore is completely comfortable in Q4.
Rajesh Majumdar
Okay, thank you.
Satish Pai
Thank you.
operator
Thanks. Thank you. Ladies and gentlemen, due to time constraint, that was the last question. You can connect with the investor relations team for your further queries. I now hand the conference over to Mr. Pai for closing remarks.
Satish Pai
Yeah, I think I would just thank you all for joining. I think that both the India business we see quarter four being a very strong quarter and I think that for Novelis the point that we made out is the underlying business is extremely strong and I think that the next six months is going to be critical for us to get number one Oswego up and running and number two get the hot mill and bay minute commissioned in the second half of this year. I think that after that we are very comfortable that you’re going to see a very strong performance from Novelis going forward.
So thank you very much for your attention. Mention. Thank you.
operator
Thank you members of the management, on behalf of Hindalco Industries. That concludes this conference. Thank you all for joining us and you may now disconnect your lines.