News Orders & Deals Hindalco's Novelis Raises $750M, Projects Strong FY27 with $500/Tonne EBITDA TargetHindalco's Novelis Raises $750M, Projects Strong FY27 with $500/Tonne EBITDA Target
Hindalco Industries' subsidiary Novelis has secured $750 million through a share subscription agreement with AV Minerals, involving 50 lakh common shares at $150 each. Management projects FY27 as a strong year with $500/tonne EBITDA targets, supported by the Oswego mill restart in December and the strategic Bay Minette project offering 600,000 tonnes capacity expandable to 1.2 million tonnes.
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Hindalco Industries announced that its wholly owned subsidiary Novelis Inc. has secured $750 million through a subscription agreement with AV Minerals (Netherlands) N.V. The transaction, disclosed on December 29, involves AV Minerals purchasing common shares while serving as both the sole shareholder of Novelis and a wholly owned subsidiary of Hindalco Industries.
Transaction Structure and Financial Details
The subscription agreement outlines specific parameters for this substantial corporate investment within Hindalco's organizational structure.
| Parameter | Details |
|---|---|
| Share Quantity | 50,00,000 common shares |
| Share Price | $150.00 per share |
| Total Transaction Value | $750 million |
| Share Type | Common shares, no par value |
| Filing Authority | U.S. Securities and Exchange Commission (Form 8-K) |
Management Outlook and FY27 Projections
Satish Pai, Managing Director of Hindalco Industries, has expressed strong confidence in Novelis's future performance, projecting FY27 to be a standout year for the U.S. subsidiary. The company is targeting $500 per tonne earnings before interest, taxes, depreciation, and amortisation (EBITDA) as operations normalize following recent operational disruptions.
Pai indicated that Novelis's Oswego mill, which was affected by a fire earlier in the year, will restart in the first week of December. This restart is expected to significantly strengthen fourth-quarter results, with management noting that Q3 bore the primary impact of the Oswego fire incident.
Strategic Growth Initiatives and Market Position
The Bay Minette project in the U.S. represents a key component of Novelis's expansion strategy. This facility provides 600,000 tonnes of capacity with potential expansion to 1.2 million tonnes, positioning the company advantageously in the largest aluminum market.
| Project Details | Specifications |
|---|---|
| Initial Capacity | 600,000 tonnes |
| Expandable Capacity | 1.2 million tonnes |
| Strategic Advantage | Tariff protection in U.S. market |
| Expected Impact | Highly accretive to future performance |
Pai emphasized that the U.S. tariff environment creates significant barriers for imports, making domestic production facilities particularly valuable. Despite budget increases due to U.S. inflation, the project is expected to deliver returns above the cost of capital.
Market Performance and Regulatory Compliance
Shares of Hindalco Industries ended trading at ₹865.35, down ₹7.55 or 0.86% on the BSE. The announcement has been made in compliance with Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, with documentation filed across multiple regulatory jurisdictions to ensure transparency for international operations.
Historical Stock Returns for Hindalco Industries
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| +4.10% | +7.89% | +14.71% | +44.39% | +70.61% | +332.71% |
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