(Bloomberg) -- Hindalco Industries Ltd., which delayed an initial public offering for Novelis Inc., said it’s seeking a premium valuation for its US unit and any attempt to list it will take place in 2025.
The plan to raise as much as $945 million by floating Novelis, the world’s largest aluminum recycler, was postponed in June.
“When we went for the IPO in those market conditions, we could not get that premium valuation” that the unit deserved, Satish Pai, managing director of Hindalco, said in an interview on Bloomberg Television. The company will assess market conditions, and “it would be fair to say that any next attempt we make will be next year.”
Hindalco, controlled by billionaire Kumar Mangalam Birla, expects the public float to fetch higher multiples for Novelis, which operates 14 scrap-processing plants across North America, Europe, Asia and South America.
“If I look at Novelis and if I look worldwide, whether it’s packaging which is cans, whether it’s automotive, whether it’s aerospace or whether it’s building and construction, we are seeing very good market demand across all these market sectors that we play in,” Pai said.
Still, the focus going forward will be on the upstream businesses in India, where demand for both aluminum and copper has been surging as a result of construction, focus on electrification and usage in renewable energy installations.
India’s aluminum use surged 15% in the quarter through June from a year earlier, while copper demand expanded 11%, well beyond their normal growth rates, Pai said. The company needs to produce more of the primary metal to meet the country’s growing requirements.
The strong domestic demand comes with a flip side. There are concerns about rising imports at a time when the biggest producer China is battling an unexpected economic slowdown, he said. Hindalco reported Tuesday a 25% jump in April-June profit, buoyed by higher metals prices than in the same period the previous year.
Commenting on the Supreme Court’s ruling in July, upholding the power of the states to levy taxes on mineral rights and mineral-bearing land, Pai said the decision was a cause of worry. The Economic Times reported on Wednesday that the top court allowed regional authorities to collect past dues from the federal government and companies from April 2005.
“It will be fair to say that we’re waiting with a little bit of anxious feelings in our stomachs,” Pai said. “While we are not worried about the retrospective part of the tax — we really don’t have an exposure — but on a prospective basis, we do hope that between the state and the central governments, the industry does not get burdened with too much taxation.”
--With assistance from Anand Menon.
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