Aluminium Capex To Grow 3 Fold In Next 5 Years

Top Stories

Company

L&T Partners with PS Technology to Revolutionise Railways

6 mins read. August 2, 2024 at 12:45 PM

Company

Jindal Saw Q1 FY24 PAT Rises 67% to Rs 441 Cr

4 mins read. August 2, 2024 at 12:41 PM

Company

Pfizer Q1 FY25 PAT Zooms 61% to Rs 151 Cr

4 mins read. August 2, 2024 at 12:36 PM

Stock chart

Aluminium capex to grow 3-fold in next 5 years

ri-calendar-2-lineJan 31, 2023

By: BlinkX Research Team

FbkFbkTwitterTelegram

A recent study by CRISIL highlights solid long term prospects for aluminium sector despite short term headwinds. Healthy OPMs will push local aluminium manufacturers to spend Rs 70,000 crore over next five fiscal years to 2027. The capex to expand capacity will be 3-times what was incurred in last 5 fiscals.

 

In India, the aluminium manufacturing capacity of 4.1 million tonne per annum (MTPA) is monopolized by 3 companies viz. Vedanta, Hindalco and NALCO. The trigger for aluminium demand comes from strong expected prices of aluminium and higher spending on infrastructure, electrification and transition to EVs. Emission concerns will keep global capacity utilization in check.

 

While the global demand for aluminium is expected by CRISIL to stay flat to marginally positive, the domestic demand for aluminium is likely to increase by 6-7% in near term and 4-5% in medium term. The green transition in terms of renewable capacity and the capacity of electrical vehicles is extremely aluminium-intensive which will be a key factor driving aluminium demand.

 

There are several triggers for aluminium sector. Firstly, better product mix will boost profitability of aluminium companies. Secondly, backward integration is likely to sustain cost-competitiveness for aluminium companies, with India already among the lowest-cost producers in the world. This will help in export competitiveness. Despite the sharp spike in smelter capacity, the capacity utilization is expected to be robust at over 90%.

 

With easing input cost inflation, improved domestic coal availability and focus on captive mining, CRISIL expects aluminium sector profitability to stabilise at 27-29% in FY23. The return of China to the mainstream will help boost demand and ensure supply chains are well oiled. The sector is expected to maintain net debt / EBITDA ratio of 2.5X and interest coverage of 8X in the next few years.

Related News

News Thumbnail
Business

PSP Projects secures lowest bid for Dharoi Dam region project

1 mins read. November 6, 2023 at 09:23 AM

News Thumbnail
Business

Bata strikes deal with Authentic Brands Group for Nine West

1 mins read. November 6, 2023 at 08:43 AM

News Thumbnail
Business

Shakti Pumps secures 7th patent for Waste Water Pump innovation

2 mins read. October 31, 2023 at 07:03 AM

Related Blogs

Stock chartDemat Account

Biggest Winners and Losers in MSCI: Key Movers in Global Indices 2025

0 people read

3 mins read . Aug 20, 2025

Stock chartMutual Fund

What MF Big Boys Bought and Sold – Top Mutual Fund Stock Activity in 2025

0 people read

8 mins read . Aug 18, 2025

Download app

Access BlinkX
everywhere
across device

Join the Future of Trading

with BlinkX

#ItsATraderThing

Open Trading Account
Verify your phone
+91
*By signing up you agree to our terms & conditions