India’s Hindalco Industries (NSE: HALC) flagged concerns over elevated fuel costs in the third quarter after it reported a jump in second-quarter profit on Friday, aided by higher aluminium prices. Rising coal costs could eat into gains from higher metal prices at one of India’s biggest aluminium and copper producers, even as the company expects aluminium prices to hold near current levels for the next two quarters.
The company expects coal costs to climb another 5% in the third quarter after a 5% rise in the quarter ended September 30, Managing Director Satish Pai said in a post-earnings call.
Coal supply to the aluminium sector in northern India was tight during the monsoon; however, the company expects the cost of coal to ease after the third quarter, Pai added.
Total expenses climbed 37% in the second quarter, due to a 38.5% jump in raw materials costs, while fuel costs rose 14.5%.
The Aditya Birla Group-owned firm reported a 59% jump in consolidated net profit to 75.32 billion rupees ($799.96 million).
Aluminium prices climbed about 23% year-on-year during the September quarter amid supply constraints in China and robust demand from clean energy and infrastructure. However, they fell 10% from the previous quarter, ending four straight quarters of gains.
“In the next two quarters, we are expecting aluminium prices to remain around this current level,” Pai said.
Aluminium prices could settle at $2,600 to $2,800 per tonne in fiscal 2028 from the current $3,071, if geopolitical tensions in the Middle East subside, he added.
Spot copper prices also climbed about 44% on-year, according to data from a Jefferies note.
Hindalco’s overall revenue from operations rose 39% to 917.08 billion rupees, supported by 37% revenue growth at Novelis, which contributes nearly 60% of the company’s revenue.
Emkay Global analysts expected Novelis’ profitability to benefit from a smaller-than-expected hit from fires at Novelis’ plant in Oswego, New York, and US tariffs, compared with the year-earlier quarter.
Revenue from Hindalco’s aluminium upstream and copper segments grew 32.6% and 46.8% respectively, driven by strong metal prices and higher volumes.
($1 = 94.1550 Indian rupees)
(Reporting by Anuran Sadhu in Bengaluru; Editing by Nivedita Bhattacharjee and Jochelle Mendonca)
