Hindalco Shares Plummet 15% on Novelis’ Bay Minette Project Updates

Hindalco Share Price: Shares of Hindalco Industries Ltd experienced a sharp decline of 15% during Tuesday’s trade session as Novelis, a subsidiary, unveiled its December quarter results along with revisions in the Bay Minette project’s capex and timeline.

Novelis reported an upward revision of the Bay Minette project’s capital expenditure by 65% and indicated a one-year delay in its completion. Additionally, the return guidance from the project was trimmed from ‘mid-teens’ to ‘double digits.’

This announcement triggered a substantial sell-off in Hindalco’s stock, with prices plunging by 14.69% to reach a low of Rs 496.80. Despite the setback, analysts maintain optimism regarding the potential upside from the prevailing levels.

Kotak Institutional Equities noted, “The company’s decision to revise the capex outlay for its key growth project in North America and delay the timeline may not impact explicit earnings forecasts until FY2026E, but it does hinder growth, earnings, and return prospects over the next five years.” The brokerage set a fair value target of Rs 535 on the stock.

Similarly, JM Financial acknowledged the significant escalation in projected costs for the Bay Minette plant, which could lead to a lower internal rate of return (IRR). However, the firm anticipates the earnings trajectory to benefit from plant commissioning, increased recycling, and evenly spread capex. This is expected to result in higher shipments and margins, thereby maintaining a sustainable EBITDA per tonne of $525 per tonne.

While concerns persist over the impact of cost escalation and delay on Hindalco’s growth trajectory, analysts remain optimistic about the company’s ability to navigate challenges and capitalize on opportunities in the long term.