Novelis IPO to be taken up once conditions are right for premium valuation, says Hindalco MD Satish Pai
Hindalco Industries will relook at the IPO of its US-based subsidiary Novelis Inc once market conditions are right, allowing the company to command premium valuations, managing director Satish Pai said. The Indian aluminium major also announced a capital expenditure of $4 — $5 billion over the next three years for its upstream Indian projects.
“The next few quarters for Novelis are going to be a little bit tough because the scrap spreads are tight. So I think for the IPO, we will wait till we are happy with the market conditions and Novelis performance is also at that level, then we can get that premium valuation that we want,” Pai said on a call after the company’s quarterly earnings.
Hindalco had deferred the Novelis IPO in June citing market conditions. It was looking to sell up to 8.6% in Novelis at an implied market value of up to $12.6 billion.
Novelis’ income for Jul-Sep fell 18% year-on-year, while adjusted EBITDA was down 5%. The adjusted EBITDA per tonne fell 6% year-on-year to $489, and the company withdrew its profitability guidance until further clarity on metal markets. In February, the company had guided that the EBITDA per tonne at Novelis would return to $525 per tonne on a sustained basis from the March quarter onwards.
“We have said that in the next two quarters we are going to pause that guidance because of the scrap headwinds that we see. So, I think that for us to get comfortable again, we want to get to that $525 per ton,” Pai said on Monday.
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