The stock of Hindalco Industries Ltd, a metal sector company, saw a sharp decline on Thursday. The stock dropped by more than 7%, touching an intraday low of ₹770. The reason for this decline is that its US subsidiary, Novelis, reported that a fire at one of its plants in New York would impact its business next year.
Why Will the Business Be Affected?
Hindalco’s US subsidiary, Novelis, mentioned that it would incur significant financial losses due to the fire at its New York plant in September. In its regulatory filing, Novelis stated that the fire, which broke out at its factory on September 16, 2025, would have a negative impact on its financial situation in the current fiscal year (FY26). The company estimates a reduction of $550-650 million in cash flow due to the incident. Novelis also mentioned that the fire had caused normal production at the plant to halt, leading to a drop in its EBITDA by $100-150 million.
Cash Flow Will Be Affected
Novelis has stated that repair work is already underway, and it expects the hot mill to be operational again by the end of December 2025. After that, it will take another 4-6 weeks to bring the production back to normal levels. This delay will result in reduced earnings and lower cash flow in the short term.
What Does the Subsidiary Do?
Novelis is the world’s largest producer of flat-rolled aluminum sheets, supplying major companies in the automotive and beverage industries. It is a wholly-owned subsidiary of Hindalco Industries, which is part of the Aditya Birla Group. Hindalco has already confirmed the fire incident and stated that it is still investigating the cause of the fire and assessing the extent of its impact on the company’s operations.
What Did the Brokerage Say?
Brokerage firm Invetec downgraded the stock from its previous rating. The firm now recommends selling the stock and has reduced its target price from ₹775 to ₹693. This target price reflects a 16.5% decline from the current market price. The downgrade was made because the brokerage expects that the fire incident will force the company to take on more debt and result in lower profits.
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