Hindalco eyes 40% of its earnings from downstream ops in 4 years: Satish Pai

Hindalco's downstream operations are likely to bring in as much as 30-40% of the company's earnings before interest, tax, depreciation and amortisation in three-four years, its chief executive told ET.

These operations — copper, downstream aluminium and speciality alumina — currently account for about 10% of the company's Ebitda, Satish Pai said. Once this mix changes, Hindalco's downstream businesses are likely to have an enterprise value of 8-9 times their Ebitda, while the upstream business may continue to be valued at six times. «In India, the downstream players are valued much higher. So that is where the whole game is,» Pai said.

Capital-intensive sectors such as metals are generally valued using the EV/Ebitda valuation.

Hindalco, a $26 billion company and the world's largest producer of aluminium by revenue, on Thursday unveiled a new brand identity, terming itself an engineered solutions provider instead of a materials supplier.

«Hindalco's new identity reflects our role as a catalyst for change, a problem solver, and a co-creator of new solutions that power progress across industries,» chairman Kumar Mangalam Birla said at the launch.

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Birla reiterated that the company would be spending ₹40,000-45,000 crore on capital expenditure across the aluminium, copper and speciality alumina businesses. «This marks a pivotal moment in Hindalco's journey as we transition from a metals manufacturer to an innovation-driven solutions provider,» CEO Pai said.

While the company has been a supplier for several key projects of the government, Pai said the Indian defence manufacturing is yet to take off. «We are pushing for it,» he said.

Even though the market for defence in India is not at that scale currently,