Hindalco's Novelis eyes $12.6 bn IPO valuation

Novelis Inc., a subsidiary of Aditya Birla Group’s metals flagship Hindalco, is eyeing a valuation of up to $12.6 billion in its initial public offering in the United States.

The aluminium recycler is looking to raise up to $945 million by offering 45 million shares at a price range of $18 and $21 each.

Novelis will list on the New York Stock Exchange under the symbol "NVL".

The Aditya Birla Group company is a leading aluminum solutions provider and the world leader in aluminum rolling and recycling.

“Novelis expects the selling shareholder to grant the underwriters an option to purchase up to an additional 6,750,000 common shares to cover over-allotments, if any, for 30 days after the date of the final prospectus,” Hindalco says in a regulatory filing.

Novelis will not receive any proceeds from the sale of common shares by its sole shareholder.

After the completion of the IPO, a wholly owned subsidiary of Hindalco will own 555,000,000 shares of Novelis’ common shares, representing 92.5% of Novelis’ total outstanding common shares (or 91.4% if the underwriters exercise in full their over-allotment option).

Morgan Stanley, BofA Securities and Citigroup are acting as lead book-running managers for the proposed offering with Wells Fargo Securities, Deutsche Bank Securities and BMO Capital Markets acting as additional book-running managers.

Novelis parent Hindalco reported a 32% rise in its consolidated net profit for the quarter ended March aided by improved margins across all business segments. For the full fiscal 2023-24, profit increased 1% to ₹10,155 crore.

Consolidated revenue for the fourth quarter stood at ₹55,994 crore, flat year-on-year versus ₹55,857 crore in Q4 FY23, and up 6% quarter-on-quarter, on account of better realisations and volumes in India operations.

Hindalco reported an EBITDA of ₹7,201 crore in Q4 FY24, up 24% year over year, driven by lower input costs and higher volumes. On a sequential basis, EBITDA was up 14% driven by better performance of India Aluminium, Copper and Novelis.

Novelis’ revenue in Q4 FY24 stood at $4.1 billion (vs $4.4 billion), down 7% YoY, impacted by lower average aluminium prices. Net income from continuing operations, excluding special items, was $179 million in Q4 FY24, up 2% YoY.

Quarterly revenue from Hindalco’s copper business stood at ₹13,424 crore, up 20% YoY, on account of higher volumes. Copper EBITDA hit at an all-time high of ₹776 crore, up 30%, backed by record sales.

“The Copper business has grown to become the 2nd largest in the world for Copper rods (excluding China). It achieved its best ever performance with sales crossing 500,000 tonnes for the first time, and an all-time high EBITDA for the quarter and the year. Similarly, the Aluminium India Upstream Business reported industry-best quarterly EBITDA margins of 32%, driven by higher volumes and cost optimisation,” said Satish Pai, managing director, Hindalco Industries.

“Our continued focus on enhancing share of the downstream segment is evident in its promising sales trajectory. Novelis demonstrated an improved EBITDA per tonne driven by lower operating costs, favourable metal benefits and market recovery,” Pai added.