Hindalco Industries Expects Consolidated Debt to Peak at ₹80,000 Crore, Plans Deleveraging by Next Quarter

Hindalco Industries has announced that its consolidated debt has more or less reached its peak at approximately ₹80,000 crore. The company is preparing for a sustained deleveraging cycle, with debt reduction expected to gain momentum starting next quarter as capital expenditures on major projects wind down.

Satish Pai, Managing Director of Hindalco Industries, stated that the firm has made a firm commitment regarding its financial metrics. According to Pai, the net debt-to-EBITDA ratio is expected to be at four times in the fourth quarter. He noted that the completion of debt commitments related to the Bay Minette project, combined with improving earnings and stronger free cash flows, will support the ongoing deleveraging exercise.

The anticipated debt reduction follows a substantial investment period by subsidiary Novelis, which focused on capacity expansion and restoring its Oswego facility following a fire incident. With these projects nearing completion, the company anticipates that incremental earnings and improved cash generation will strengthen its balance sheet over the coming years.

Pai highlighted the company's diversified business model as a key driver for financial performance. Hindalco relies on upstream aluminium, downstream aluminium, copper, and specialty alumina to provide varied earnings streams. While softer London Metal Exchange (LME) aluminium prices could potentially impact the profitability of the upstream business, contributions from downstream operations and other segments are expected to provide a cushion.

Looking ahead, Hindalco targets its downstream aluminium business to reach a capacity of around 600,000 tonnes in extrusions and rolled products by FY28. These operations are projected to generate an EBITDA of $300-350 per tonne, translating to over ₹2,000 crore annually. Combined with copper and specialty alumina, the company expects nearly ₹6,000 crore of EBITDA from businesses not directly linked to LME aluminium prices over the next two years.

Additionally, Hindalco anticipates that operational costs in India will ease in the fourth quarter due to improved coal availability. The company is also continuing its copper expansion plans despite weak treatment and refining charges, backed by long-term copper concentrate supply agreements and investments in copper recycling to secure raw materials.

The company maintains that the conclusion of its major investment cycle, alongside improving operating profitability and free cash generation, establishes a solid foundation for reducing leverage going forward.

"Hindalco's transition from an intensive capital expenditure phase to a structured deleveraging cycle is a textbook example of long-term capital management in heavy industries. By focusing on asset completion, diversified revenue streams outside of LME pricing, and operational cost efficiencies, large enterprises can successfully stabilize their balance sheets. For growing businesses and emerging ventures, this strategy underscores the importance of aligning major capital investments with clear cash flow generation timelines to manage debt effectively and secure sustainable financial health." — Dr. Shishir Gupta, Founder & CEO, StartupLanes