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Shares of Hindalco Industries hit a record high of ₹713.40 on Wednesday on the BSE, after the company’s US arm Novelis launched initial public offering (IPO) to raise up to $945 million. The stock, however, closed at ₹705.35, up 3.64 per cent over the previous day’s close.
“The IPO’s price per common share is currently estimated to be between $18 and $21 a share. Novelis has applied to list its common shares on the New York Stock Exchange under the symbol ‘NVL’,” the company said in a statement on Tuesday. Novelis plans to raise up to $945 million, with an estimated equity valuation of up to $12.6 billion.
The money raised will come to Hindalco. Currently, Kumar Mangalam Birla-owned Hindalco owns 100 per cent of Novelis through AV Minerals. Post-IPO, Hindalco will own around 92 per cent stake.
Analysts’ view
According to domestic brokerage Prabhudas Lilladher, at the higher end of IPO price and $4.8-billion debt, Novelis’ enterprise value (EV) works out at $17.4 billion. “This is 9 per cent higher than the valuation we are subscribing ($16 billion) in our SOTP for Hindalco,” it said, adding that at the lower end, EV works out at $15.6 billion.
“Considering the buoyancy in the US equity markets and expectation of strong prospects, we expect Novelis to receive higher end of valuation and maintain our positive stance on Hindalco,” the brokerage added.
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According to global brokerage CLSA, Price Band Implies Novelis’ market capitalisation of $10.8-12.6 billion and proceeds of $810-945 million for Hindalco. This data Indicates a valuation of 7.7x–8.6x for Novelis. “We value Novelis at 6.5x FY26 EV/EBITDA in Hindalco’s SOTP,” CLSA said with a Buy rating and a price target of ₹770.
In a recent note, ICICI Securities said post deleveraging, the company has been targeting growth in both aluminium and copper divisions. While in the short term, the focus is on downstream projects, upstream expansion in both the divisions is being considered, contingent on RTC-RE power and coal availability.
“Taking cognisance of sustained high performance of copper division, we raise our FY25/26E EBITDA by 1-2 per cent%. However, net debt is much lower compared to our estimates. Hence, revised TP works out to ₹830 (₹770 earlier),” the domestic broking firm said.
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