Hindalco Banks On Various Sectors, Rs 10,000-Crore Capex For Better H2, Says MD

Hindalco Industries' top executive said the company is aiming for a strong second half driven by electrification, packaging and construction sectors, amid plans to increase capital expenditure to Rs 10,000 crore per year.

The India business is going to have a good second half while the Novelis business is going to face some headwinds, Managing Director Satish Pai told NDTV Profit in an interview on Tuesday. "With the integrated model of having an upstream and downstream business, Hindalco's consolidated business will have a good second half."

In the second quarter of the financial year 2024–25, earnings posted by Hindalco Industries Ltd. beat analysts' estimates. The aluminium producer's net profit increased 78% year-on-year to Rs 3,909 crore in the quarter ended Sept. 30, 2024.

Talking about the second half, Pai said that government spending on infrastructure will always be part of the demand story. He expects the electrical sector to continue doing well in the coming quarters.

The packaging sector continues to perform well, given the anti-dumping imposed on Chinese foil and the India consumption story. "This will continue to do well in the second half."

According to him, the building and construction space was sluggish but will pick up in the second half.

The only sector that has not done well is auto, he said. However, most analysts are predicting that the second half will witness a comeback, Pai said. "By and large, we are a reflection of what you see in the Indian economy."

Asserting that the company's cost structure has been and will remain strong, he added, "The profitability on the aluminium side will continue to be strong and our downstream business is starting to kick back in."

On the copper side, "this quarter was exceptionally good with good third party and precious metal sales." Pai expects the company to post a Rs 600-crore to Rs 650-crore Ebitda for copper in the upcoming quarters.

The company has announced a "fairly aggressive capex plan" going forward. "We are going to do a brownfield aluminium and copper smelter. Our capex is going to be more like $4–5 billion over the next three years."

From Rs 6,000 crore to Rs 7,000 crore per year capex, the company will start to invest Rs 10,000 crore per year, he said. "That will mean that we will now start to put back a little bit of debt on the balance sheet because today we are at zero net debt."

The next phase of capex to grow the aluminum upstream business and the future upstream capacity expansion that is brownfield in nature implies lower risk, he said.

Shares of Hindalco Industries Ltd. closed 0.90% lower at Rs 649.45 apiece on the NSE on Tuesday against the benchmark Nifty 50, which declined by 1.07% to 23,883.45.