Hindalco’s ₹85,000 crore investment cycle to double its EBITDA

Aditya Birla Group flagship firm, Hindalco Industries, is expecting to double it's EBITDA (earnings before interest, tax, depreciation and amortisation) following completion of ₹50,000 crore alumina, aluminium smelters, copper, and re-cycling projects in India and the $4 billion Bay Minette project of the subsidiary Novelis in the US. The up stream projects in India will be completed in the next three to four years, while the project in the US will be completed by next year.

“After five years of downstream investment, we are now entering an upstream expansion,” Satish Pai, managing director, Hindalco told Fortune India. “We’ll invest ₹50,000 crore over the next three to four years in alumina, aluminium smelters, copper, and re-cycling," he added.

Around ₹15,000 crore will go into copper, the rest into aluminium. “Our goal is to balance upstream and downstream—if we produce 2MT of aluminium, we want 1.5MT of downstream capacity. That stabilises earnings and improves valuation,” he said.

Funding will largely come from internal accruals. The company may borrow ₹10,000–15,000 crore in the next two years. Hindalco's balance sheet is strong, he expressed confidence.

On the global front, Novelis is executing its $4 billion Bay Minette project in the U.S., expected to be completed next year. Novelis' new, low-carbon facility in Bay Minette in Alabama, will be the first fully integrated aluminum manufacturing and recycling plant built in the U.S. in nearly 40 years and is expected to create up to 1,000 new jobs. Boasting an initial capacity of 6 lakh tonne of finished goods for the North American can and automotive markets, it will be powered by renewable energy, use recycled water, and operate as a zero-waste facility. The US subsidiary is also working to achieve net carbon neutrality at Bay Minette. The plant is currently under construction.

“Combined, Hindalco and Novelis are investing over $10 billion (around ₹85,000 crore),” says Pai. “After ex-pansion, Novelis’s Ebitda should rise from $1.8 billion to $3-3.5 billion, and Hindalco’s India Ebitda should double from the current ₹18,000-20,000 crore.”

The twin-engine growth is designed to stabilise earnings and capitalise on the surging global demand for aluminium and copper driven by electrification, fuel efficiency and sustainability trends.

Novelis, which was initially in aluminium can focused company, was diversified into higher-margin automotive segment. Auto now accounts for about 20% of Novelis's business, with cans at 60%, specialties at 18%, and aerospace at 2%. The India ustream projects are mostly brownfield at existing large sites like in Odisha and Madhya Pradesh, which mitigates long land acquisition timelines.