Hindalco's $10 Billion Expansion Fuels Market Surge: Strategic Moves in Aluminium and Copper

On Friday, Hindalco Industries, the world’s largest aluminium company by revenue and the second-largest producer of copper rods globally, saw its shares increase by 1.3% on the Bombay Stock Exchange (BSE), reaching Rs. 694.45. This surge followed the company’s announcement of a substantial $10 billion investment plan aimed at expanding its operations across India and its subsidiary, Novelis.

Current Market Position:

With a market capitalisation of Rs. 1.53 lakh crore, Hindalco Industries Limited (NSE: HALC) shares were trading positively at Rs. 692 at 12:05 p.m. on the same day. This represented a nearly 1% increase from its previous closing price of Rs. 685.5.

Key Announcement from the AGM:

During the company’s 65th Annual General Meeting (AGM) held on August 22nd, Chairman Kumar Mangalam Birla outlined an ambitious expansion strategy for Hindalco. The company plans to invest $10 billion in both ongoing and future projects, which include the expansion of aluminium and copper smelting capacities, the establishment of the Aditya Flat-Rolled Products (FRP) plant, the new alumina refinery in Rayagada, Odisha, and the Bay Minnette expansion under Novelis.

Birla highlighted the anticipated growth in India’s aluminium consumption, which is expected to rise from 5 million tonnes in FY24 to nearly 10 million tonnes over the next decade. He also projected a 10% increase in copper consumption in the coming years, reflecting the growing demand for these critical materials.

Detailed Expansion Plans:

Hindalco is set to significantly increase its aluminium production capacity with a brownfield expansion of nearly 2 lakh tonnes at the Aditya Aluminium smelter in Odisha. A notable aspect of this expansion is its emphasis on renewable energy, which will power the operations, aligning with global sustainability trends.

In addition to aluminium, Hindalco is making strides in its copper business. The company is establishing a greenfield alumina refinery in Rayagada, Odisha, with an initial capacity of 8.5 lakh tonnes, slated for commissioning by FY27. Moreover, the company plans to expand its copper smelting operations by setting up a brownfield facility in Gujarat. This facility will cater to the rising domestic demand for copper, a vital metal in India’s industrial growth.

The company is also constructing India’s largest Copper Inner Groove Tube plant in Wagodia, Gujarat, with the goal of reducing the country’s dependency on imports for this critical component, commonly used in air conditioning systems. This plant is expected to commence operations by the end of CY24.

Hindalco has already secured long-term contracts for the beverage packaging capacity at this facility, which is expected to be operational in the latter half of CY26.

Additionally, the company is on track to commercialize its Superfine Precipitated Hydrate plant by FY25. This plant will be the first in India to produce this essential flame-retardant material used in wires and cables, further solidifying Hindalco’s position as a leader in the industry.

Financial Performance:

Hindalco has reported impressive financial results, with a notable 7.6% year-on-year increase in revenue from operations, rising from Rs. 52,991 crores in Q1 FY24 to Rs. 57,013 crores in Q1 FY25. The company also achieved a significant jump in net profit, which surged by 25.3% year-on-year, from Rs. 2,454 crores to Rs. 3,074 crores during the same period.

The Copper Business segment, in particular, delivered outstanding results in FY24, achieving an all-time high EBITDA of Rs. 2,616 crores, a 16% increase from the previ”us year. The segment also surpassed 5 lakh tonnes in sales for the first time, making Hindalco the second-largest producer of copper rods globally, outside of China. This strong performance is attributed to the company’s consistent operational excellence, cost optimization strategies, and favorable macroeconomic conditions.

Hindalco has maintained a robust balance sheet and liquidity position, allowing it to keep its Net Debt to EBITDA ratio below 1.5x, reflecting the company’s financial strength and prudent management.

Stock Performance:

Over the past year, Hindalco Industries’ shares have delivered impressive returns of nearly 49.2%, with year-to-date returns of around 11.2%, demonstrating the company’s strong performance in the market.

About Hindalco Industries:

Founded in 1958, Hindalco Industries Limited is the metals flagship company of the Aditya Birla Group. The company operates primarily in two segments: Aluminium and Copper. Together with its subsidiary Novelis, Hindalco is a global leader in flat-rolled products and is the world’s largest recycler of aluminium.

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