Hindalco Stock Jumps as Novelis Is Ready for $945 Million NYSE IPO Debut

Shares of Hindalco climbed on May 29 as the Aditya Birla Group company announced plans to list its US subsidiary, Novelis, on the New York Stock Exchange (NYSE). Novelis will offer 45 million shares priced between $18-21 each.

This sale represents 7.5% of Hindalco’s current ownership in Novelis, according to public disclosures. The IPO could bring in up to $945 million for Hindalco.

Hindalco acquired Novelis in 2007 for $6 billion and will be the sole beneficiary of the IPO proceeds. At the $18-21 price range, Novelis’ valuation is pegged between $10.8 billion and $12.6 billion.

CLSA noted that this valuation reflects a range of 7.7 to 8.6 times Novelis’ earnings. The brokerage incorporates a 6.5 times FY26 EV/EBITDA valuation for Novelis into Hindalco’s overall valuation.

CLSA maintains a ‘Buy’ rating on Hindalco with a target price of Rs 770 per share. They expect key discussions around the deal to focus on the valuation of Hindalco’s stake in Novelis, its overall valuation, and how the IPO proceeds will be used.

If the greenshoe option is exercised, the IPO proceeds could reach $1.08 billion at the high end of the price range, according to a media report. Based on Novelis’ net debt of $4.35 billion, the company’s enterprise valuation is estimated between $15.2 billion and $17 billion.

Analysts at Prabhudas Lilladher expect Novelis to achieve a high valuation due to strong US equity market conditions and promising prospects. They maintain a ‘buy’ rating on Hindalco stock with a 6.5x EV multiple for Novelis and a 5x multiple for Hindalco’s Indian operations, citing improvements in both Novelis’ performance and higher London Metal Exchange (LME) prices for the India business.

On May 28, Hindalco shares closed slightly higher at Rs 680.00 on the National Stock Exchange (NSE). Over the past year, the stock has surged nearly 62%, outperforming the benchmark Nifty 50, which rose 23% during the same period.