Hindalco shares slip in morning deals but recover later after Novelis postpones IPO

Hindalco shares slipped over 4 per cent in the morning deals as the company in a statement said it has postponed the initial public offering of Novelis due to market conditions. However, the stock recovered in the afternoon deals. At around 12:30 p.m., shares of Hindalco was up 0.99 per cent at Rs 655.5 apiece on NSE. 

"Novelis Inc., a wholly owned subsidiary of the Company has announced the postponement of its initial public offering due to market conditions. Novelis will continue to evaluate the timing of the offering in the future," the filing read. 

Novelis in May had filed IPO papers in the US. In the public issue, the aluminum company’s US arm is supposed to offer 4.5 crore shares in the price band of $18-21 per share.

The company is aiming at a valuation of up to $12.6 billion in its US IPO, said the aluminum rolling company on Tuesday.

Novelis will not receive any proceeds from the sale of common shares by its sole shareholder. 

After the completion of the IPO, a wholly owned subsidiary of Hindalco will own 555,000,000 shares of Novelis’ common shares, representing 92.5 per cent of Novelis’ total outstanding common shares (or 91.4 per cent if the underwriters exercise in full their over-allotment option), said the company’s release.

Morgan Stanley, BofA Securities, and Citigroup are acting as lead book-running managers for the proposed offering with Wells Fargo Securities, Deutsche Bank Securities, and BMO Capital Markets acting as additional book-running managers. BNP PARIBAS, Academy Securities, Credit Agricole CIB, PNC Capital Markets LLC, and SMBC Nikko are acting as co-managers for the proposed offering

Analysts believe the focus will now shift to how the company will utilise the funds mobilised via the IPO. 

Also Read: Novelis files IPO papers in US; CLSA maintains buy on Hindalco for over 13% potential gains 

Hindalco share price: Past performance 

In a year, shares of Hindalco have given returns of over 53 per cent against Nifty50's rise of over 17 per cent.

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