Hindalco outlines its strategic imperatives, aiming for growth through aluminium and copper expansion. Key areas include upstream and downstream businesses, targeting a 4x growth in downstream by FY30. The company is focused on increasing recycled content and reducing carbon emissions, investing in projects expected to yield significant returns. Hindalco’s position among NIFTY 50 peers remains strong, with attractive valuations and a robust capital expenditure plan of $10B.
Strategic Business Imperatives
Hindalco is focusing on strategic imperatives to drive future growth, emphasizing both aluminium and copper businesses. A key goal is to achieve a 4x growth in the downstream sector by FY30. These strategies are designed to strengthen Hindalco’s market position and capitalize on emerging opportunities.
Focus on Sustainability and Circular Economy
The company is committed to sustainability, aiming to increase average recycled content and reduce carbon emissions. This includes initiatives to lower emissions to less than 3 tonnes of CO2e per Tonne of FRP shipped. The emphasis on a circular economy aligns with global trends towards sustainable business practices.
Financial Performance and Valuation
Hindalco maintains a strong position among NIFTY 50 peers with an attractive valuation. The company reported a strong H1 ROCE of 19.6%. A disciplined capital allocation strategy and a consolidated Net Debt / EBITDA at 1.23x contribute to financial stability. The company’s growth capex plan stands at $10B.
Novelis Growth and Expansion
Novelis, a subsidiary of Hindalco, is focused on capacity expansion and improving EBITDA per tonne. Key projects include developments in Logan (US), Oswego (US), and Pinda (Brazil), with commissioning planned for FY26. These projects aim to increase capacity and improve the product mix. The company projects long-term adjusted EBITDA per Tonne exceeding $600.
India Business Expansion Projects
Hindalco is undertaking significant expansion projects in India, including investments in aluminium upstream, alumina, aluminium downstream, and copper segments. Total investments in India business amount to $6.212 Billion. Key projects include Greenfield Aditya Alumina Refinery and Aluminium Smelter Expansion. The company expects self-sufficiency in captive coal by FY33, meeting 100% coal requirement through captive mines.
Aluminium Downstream Investments
Investments in aluminium downstream businesses are yielding results with enhanced capacity and unmatched quality. These include expansion of the product portfolio and cutting-edge technology for battery enclosures. Aluminium Downstream capacity will reach 600 KT post ramp-up.
Capacity and Potential
Hindalco is increasing its aluminium downstream capacity by 170 KT. This increase is expected to significantly improve EBITDA. Potential EBITDA improvement is projected at $200/t due to resource security.
Specialty Alumina
In Specialty Alumina, investments are targeted towards new value-added product developments. The company aims to produce FUSALOX™ White Fused Alumina and Superfine Precipitated ATH. Post ramp-up the estimated capacity is 1,000 KT with an EBITDA improvement projected at $50/t due to premiumisation.
Financial Strength
Hindalco’s balance sheet supports its growth strategy with Free Cash Flow after maintenance capex at $0.9B in India and $1.1B in Novelis, leading to a consolidated $2B. The net debt/EBITDA remains low at 1.23x
Source: BSE
