- 22 Jul 2024
- ICICIdirect Research
HINDALCO AIMS TO BOOST ITS AUTO PARTS BUSINESS THROUGH A DIRECT SUPPLY APPROACH
HINDALCO - 622 Change: -6.25 (-0.99 %)News: As per media sources, Hindalco is developing strategies to become a direct supplier to automakers as part of a larger effort to enhance its aluminium downstream businesses (value-added products). The company is also exploring acquisition opportunities in this area.
View: Hindalco is currently executing an ambitious capital expenditure plan of US$ 1.3 billion for its Indian operations over FY24-28, with over 70% allocated to expanding its aluminium downstream capacity. The company aims to supply auto manufacturers directly with precision parts, thereby enhancing margins beyond material supply. This includes facilities in Chakan for battery enclosures and Tata Ace EV bodies. Additionally, the company is developing downstream units for sectors such as packaging and construction, recognizing the growth potential in these areas. It is also executing an aluminium foil plant with application in Li-On batteries (sunrise sector). We maintain a positive view on the company due to the strong demand for Aluminium metal driven by its increasing application in the automobile and renewable spaces, strategic capacity expansion at Novelis and Hindalco and controlled leverage on B/S.
Impact: Positive