Capacity expansion likely trigger for Hindalco

Non-ferrous metal prices have strengthened 1-5 per cent month-on-month (M-o-M) as well as year-on-year (Y-o-Y) due to geopolitical tensions and tight London Metal Exchange (LME) inventories.

- DEVANGSHU DATTA

Higher NATO defence outlays from its EU members will also create long-term demand. India's domestic demand for aluminium and copper is expected to grow very strongly.

The long-term demand will be driven by electric vehicles (EVs), electrification, packaging, transport, renewable energy (RE) systems and construction sectors.

However, Novelis' near term may be under pressure. US prices have surged on tariff threats and may moderate as those ease. A US-Canada trade agreement would support Novelis which imports scrap from Canada.

There are new alumina capacities being commissioned in Indonesia, India and China.

But the largest global bauxite supplier, Guinea, has cancelled many exploration permits, tightening ore supply.

The scenario for Hindalco and its US subsidiary Novelis is promising although the latter has been impacted by tariffs. Consolidated revenue stood at ₹64,890 crore (up 16 per cent Y-o-Y and up 11 per cent Q-o-Q). Earnings before interest, taxes, depreciation and amortisation (Ebitda) for Hindalco stood at ₹9,609 crore (up 41 per cent Y-o-Y and 26 per cent Q-o-Q).