Furthermore, the project’s completion will be delayed by 9-12 months, now expected to finish in the second half of 2026. This delay means lower overall returns, which is disappointing for management and investors alike.
Analysts at Kotak believe that Novelis may not generate any free cash flow from fiscal year 2024 to fiscal year 2028, which is concerning. Despite Novelis reporting strong third-quarter numbers, surprises like this one are never welcomed by the market. Consequently, Hindalco’s stock has been downgraded by CLSA.
Hindalco's stock is taking a hit because of issues with its US subsidiary, Novelis. The problem stems from their Bay Minette project, which is facing significant cost overruns. The company announced that the project's expenses have skyrocketed, now estimated at $4.1 billion compared to the earlier projection of $2.5 billion. This increase is mainly due to higher costs for civil engineering and construction.