Explained: Why Hindalco shares plunged over 7% in early trade today

Hindalco Industries share price, which has been on a downward trend since Monday, experienced selling pressure on Thursday and tumbled over 7%.
The stock opened at Rs 716.95, slightly down from its previous close of Rs 717.45, and plummeted as much as 7.1% to a low of Rs 666.80 before paring some losses. By around 12:38 am, shares of Hindalco Industries were trading at Rs 683.50, reflecting a 4.73% decrease.
The recent decline in Hindalco’s stock is largely attributed to the poor earnings report from Constellium, a leading global manufacturer and recycler of aluminum products.
Constellium’s shares dropped 28% overnight after revealing disappointing third-quarter results, which fell below analysts’ expectations. The Paris-based company reported a 5% year-on-year decrease in revenue, citing weakening demand and the adverse impact of flooding on its Swiss facilities.
Experts note that Constellium’s performance serves as a key indicator of industry health, making its weak results a cause for concern among investors regarding Hindalco. The declining demand in automotive markets across North America and Europe, coupled with significant drops in various industrial markets, further exacerbates these worries.
Hindalco’s subsidiary, Novelis, which accounts for 20% of the company’s volume and a larger share of its EBITDA, is particularly vulnerable to these demand fluctuations in the automotive sector. CEO Jean-Marc Germain stated, “Our team faced significant challenges in the third quarter, including increased demand weakness across several of our end markets and the ongoing impact from the flood that occurred back in late June at our facilities in the Valais region in Switzerland.”
Hindalco is scheduled to report its earnings for the September quarter on November 11. In its previous quarter ending June 30, 2024, Hindalco had posted a consolidated net profit of Rs 3,074 crore, up 25% from Rs 2,454 crore in the same period last year, while revenue from operations reached Rs 57,013 crore, a 7.6% increase year-on-year.