Hindalco Postpones Novelis IPO, Eyes 2025 for Premium Valuation
Hindalco Industries, the parent company of Novelis, has postponed the planned initial public offering (IPO) of Novelis, the world’s largest aluminum recycler, which was initially set to raise up to $945 million. The decision to delay the IPO, originally slated for June, was driven by the desire for a premium valuation that market conditions could not support at the time.
In an interview with Bloomberg Television, Hindalco's Managing Director, Satish Pai, explained that the company is aiming for higher multiples for its U.S.-based unit and will reassess market conditions before attempting the public float again in 2025. "When we went for the IPO in those market conditions, we could not get that premium valuation," Pai stated, indicating that any new attempt will be next year.
Novelis operates 14 scrap-processing plants across North America, Europe, Asia, and South America. Pai expressed optimism about the company’s prospects, citing strong market demand in sectors such as packaging, automotive, aerospace, and construction.
Looking ahead, Hindalco plans to focus on its upstream businesses in India, where the demand for aluminum and copper is growing rapidly, fueled by construction, electrification efforts, and renewable energy installations. India's aluminum usage surged by 15% in the quarter through June, while copper demand increased by 11%, outpacing normal growth rates. To meet this rising demand, Hindalco aims to boost its production of primary metals.
However, the company is also wary of the challenges posed by rising imports, particularly as China, the world’s largest producer, faces an unexpected economic slowdown. Hindalco recently reported a 25% increase in profit for the April-June quarter, driven by higher metals prices compared to the previous year.
Commenting on the Indian Supreme Court’s July ruling, which upheld the power of states to levy taxes on mineral rights and mineral-bearing land, Pai expressed concerns about the potential tax burden on the industry. While Hindalco is not directly exposed to retrospective taxes, Pai hopes that both state and central governments will ensure that the industry is not overburdened with taxation going forward.
