Hindalco's U.S. unit Novelis files for IPO

Novelis Inc., a subsidiary of Aditya Birla Group's metals flagship Hindalco, has filed draft papers relating to the proposed initial public offering of its common shares with the U.S. Securities and Exchange Commission (SEC).

"The common shares are expected to be offered by Novelis' sole shareholder (a wholly owned subsidiary of Hindalco Industries Limited). Novelis will not receive any proceeds from the sale of common shares by its sole shareholder," the aluminium company says in a statement.

Novelis expects to complete the public offering after the SEC completes its review process.

Its parent Hindalco reported a net profit of ₹2,331 crore for the third quarter, up 71% year-on-year. This quarter's performance on a consolidated basis was driven by strong recovery at Novelis and cost control in the Aluminum India business, backed by a continuing record performance by the Copper business.

Novelis delivered a quarterly EBITDA of $454 million, up 33% year-on-year on account of favourable metal benefits from recycling, higher pricing, and lower operating costs this quarter. The resulting EBITDA per ton stood at $499 versus $376 in the previous quarter, up 33% YoY.

Novelis shipments were at 910 kilo tonnes in Q3 FY24 versus 908 Kt in the prior period due to softer market demand and impacted by seasonality, but more than offset by recovery in the beverage packaging and automotive demand.

“Our Q4 guidance of delivering a sustainable $525 EBITDA per ton remains intact as the market continues to recover in beverage packaging and other markets show resilience,” Satish Pai, managing director, Hindalco Industries, says in a post-earnings conference call.

Novelis' is the largest producer of rolled aluminium products in North America.

In December, Fortune India reported that Hindalco plans to significantly expand its manufacturing capacity of aluminium foil that is used in rechargeable batteries to serve the rapidly growing market for electric vehicles (EVs) and energy storage systems. The company is investing ₹800 crore to build a new plant near Sambalpur in Odisha that will initially produce 25,000 tonnes of the product which forms the backbone of lithium-ion and sodium-ion cells.

By 2030, demand for battery-grade aluminium foil in India is expected to grow manifold to 40,000 tonnes, primarily driven by mushrooming growth in gigafactories for advanced cell manufacturing.

“We are seeing a fast traction in battery materials demand, driven by an impressive outlook for the electric vehicle and grid storage sectors. Raw material localisation is critical in such strategic sectors,” Pai said at the time.

Hindalco claims it has already achieved the technology breakthrough of manufacturing fine quality battery foils at its Mouda unit in Maharashtra. The Mouda unit is currently in the process of qualifying with Lithium-ion cell manufacturers in India, Europe and the United States.