Novelis Delays IPO Amid Market Uncertainty

Billionaire Kumar Mangalam Birla’s subsidiary, Novelis Inc., the prominent US-based aluminum manufacturer, is opting to postpone its initial public offering (IPO) plans for at least another year. This decision stems from ongoing concerns about market valuations, as indicated by a senior executive familiar with the situation, who requested anonymity.

Strategic Wait-and-See Approach

The Hindalco Industries Ltd. subsidiary is taking a cautious stance, choosing to navigate the current downturn in global markets. The executive noted that the company is closely monitoring how economic shifts under the Trump administration might influence pricing and demand for aluminum products.

• Previous IPO Attempt: In June 2022, Novelis decided to delay a projected $945 million IPO due to unfavorable market conditions.
• Valuation Concerns: Initially, the company anticipated a valuation of around $13 billion for its IPO, but market dynamics failed to meet that expectation. Hence, Novelis is reluctant to take risks in a volatile global environment.

Novelis’ Market Position

As the largest producer of flat-rolled aluminum products globally, Novelis also leads in aluminum recycling, boasting 14 scrap-processing facilities across four continents. The proposed IPO would have involved selling 4.5 crore shares at a price range of $18-21 per share. Following the IPO, Hindalco would have retained approximately 92.5% of Novelis.

Financial Performance Insights

For the fiscal year 2024, Novelis contributed significantly to Hindalco’s financials, accounting for 61% of its revenue and 56% of its EBITDA. However, the company reported a 9% decline in net profit for the third quarter of fiscal 2025, totaling $110 million. When excluding a one-time expense of $5 million due to adverse weather conditions in its Switzerland facility, the net income reflected a staggering 32% decrease year-over-year.

• Capital Expenditure: Novelis anticipates that its capital expenditure for the financial year will be at the lower end of the projected range of $1.8 billion to $2.1 billion.

Looking Ahead

As Novelis continues to assess its options, industry analysts remain optimistic about its long-term prospects amidst shifting market dynamics and potential changes in tariffs. The company’s strategic decisions will likely be pivotal in navigating the complexities of the global aluminum market.

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