Hindalco subsidiary Novelis postpones U.S. IPO

Novelis Inc., a subsidiary of Aditya Birla Group’s metals flagship Hindalco, today announced the postponement of its initial public offering due to market conditions.

Novelis says it will continue to evaluate the timing of the offering in the future.

The world’s largest aluminum rolling and recycling company is eyeing a valuation of up to $12.6 billion in its initial public offering in the United States. Novelis plans to list on the New York Stock Exchange under the symbol "NVL".

The proposed IPO was an offer for sale by the existing promoter Hindalco Industries. Novelis was not expected to 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 was expected to own 555 million 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.

Hindalco had bought Novelis for $6 billion in 2007 and delisted it from the exchanges in the U.S.

Novelis believes the long-term demand trends for flat-rolled aluminum products remain strong. It has identified $6 billion of potential organic capital investment opportunities to grow the business through debottlenecking, recycling, and new capacity investments. It is focused on increasing capacity and align with sustainability commitments, the company said in its draft registration statement, which was submitted with the Securities and Exchange Commission (SEC) of the U.S. for review before public offering.

The aluminium recycler is building a recycling and rolling plant in Bay Minette, Alabama, for which the costs escalated by 65% to $4.1 billion from $2.5 billion. The plant will serve the beverage container market, with flexibility for automotive production. It also adds a new recycling center for beverage cans, increasing the company's recycling capacity by 15 billion cans per year when fully operational.

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

Novelis demonstrated an improved EBITDA per tonne driven by lower operating costs, favourable metal benefits and market recovery, said Satish Pai, managing director, Hindalco Industries.

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.