InvestorQ : How do you see the recent completion of Aleris acquisition impact the stock performance of Hindalco? Is it a good buy at current levels?
indhumathi Sayani made post

How do you see the recent completion of Aleris acquisition impact the stock performance of Hindalco? Is it a good buy at current levels?

Answer
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shrinidhi Rajan answered.
5 months ago


Hindalco of the Birla group finally managed to complete the acquisition of Aleris of the US, through its Canadian subsidiary Novelis. The Aleris deal was valued at $2.8 billion. It may be recollected that Novelis is the company which Hindalco had acquired way back in 2007. There is a strong logic that Hindalco sees in the deal Aleris is a major US-based rolled products company and this deal will position Hindalco as one of the world’s largest players. Now, in the aluminium space, Hindalco has a global manufacturing footprint across 49 locations. For Hindalco, the Aleris deal allows them to further diversify into premium market segments like aerospace, which is more specialized and hence margins are higher. For the Birla group, this is a major insurance for the commodity business against the vagaries of global commodity price cycles. While the short to medium term outlook for Hindalco will still be driven by commodity prices, this acquisition is expected to value accretive in the long term.