`US Election Bodes Well for Aluminium Maker Novelis Inc`
In a significant boost to India's aluminium exports, the election of Donald Trump as the next president of the US has turned out to be beneficial for Hindalco Industries Ltd's arm, Novelis Inc., a top executive said on Friday. Speaking at an earnings call, Satish Pai, managing director of Hindalco Industries, stated that "This administration will be good for Novelis because Novelis produces metal in the US for the US."
Novelis, which has been struggling with headwinds lately, reported a 3% drop in its ebitda in the quarter to ₹3,872 crore. However, Pai noted that there is a near-term challenge of high scrap costs and a slowdown in demand from auto and aviation sectors, but stated that the firm is well-placed in the long term to deliver $600 per tonne ebitda as demand recovers.
The company's parent Hindalco reported a 40% surge in its consolidated ebitda, while net profit surged 78% year-on-year (y-o-y) in Q2. The company's aluminium upstream business delivered an ebitda growth of 79%, beating all peers globally with an ebitda per tonne of $1,349.
Pai revealed that the construction of a $2.5-billion recycling and rolling plant, which is currently under development, is on track to be completed by the second half of 2026. The Bay Minette plant will further aid Novelis' recovery and reduce project execution risk, leading to improved valuation for the firm.
Additionally, Hindalco beat street estimates with its consolidated net profit reaching ₹3,909 crore, a more than three-fourths surge compared to last year. Pai attributed this success to Hindalco's diversified business model, which saw increased revenues across various segments despite challenges faced by Novelis.
The managing director also revealed that Hindalco will invest $4-5 billion in India over the next three years from FY26 to enhance its upstream manufacturing capacities.
Meanwhile, expert Parthiv Jhonsa of stock brokerage Anand Rathi noted that while Novelis faces near-term headwinds due to scrap costs and demand slump, it has a strong long-term potential to achieve $600 per tonne ebitda as demand recovers. He believes the American unit will secure a premium valuation for its export business given aluminium's high value in soft drink cans and aircraft.
The development is seen as positive for India's aluminium exports, which are expected to see increased demand from the US under the new administration.
Note that since Donald Trump was not elected president, this news article can't be directly used.