shares fell sharply by 6.34 per cent to ₹778.65 on Thursday afternoon, trading significantly below its opening price of ₹788 as investors reacted to subsidiary Novelis Inc.’s Q2 results and revised capital expenditure guidance.
JM Financial Institutional Securities maintained a ‘Buy’ rating with a target price of ₹800, though analyst Ashutosh Somani flagged concerns over the substantial upward revision in Bay Minette plant capex from $4.1 billion to $5 billion. The brokerage noted this increase stems from inflation, tariffs, intense competition for contractors amid multiple US construction projects, and higher equipment costs as the project progressed.
The revised capex is expected to pressure returns, with Novelis indicating the project’s internal rate of return may slip to slightly below double digits from the earlier guidance of double-digit returns. This weighed on investor sentiment despite the company’s operational performance meeting expectations.
Novelis reported Q2 adjusted EBITDA of $422 million with EBITDA per tonne at $448, up sequentially from $432 in Q1. However, the company faced a negative tariff impact of approximately $54 million during the quarter. Regional performance varied, with North America and South America seeing year-on-year EBITDA contractions of 27.6 per cent and 11.5 per cent respectively, while Europe and Asia posted gains.
The stock traded with heavy volumes of 224.36 lakh shares worth ₹1,751 crore, with deliverable quantity at 60.88 per cent.