Hindalco-owned Novelis delays US IPO; shares slide

By Manvi Pant and Echo Wang

New York (Reuters) -Hindalco Industries said on Tuesday its U.S-based unit Novelis has postponed its initial public offering (IPO) due to weak market conditions, sending shares of billionaire Kumar Mangalam Birla's company down as much as 6.5%.

In May, aluminium recycler Novelis said that it was targeting a valuation of up to $12.6 billion in its U.S. IPO, with Hindalco looking to raise up to $945 million through the sale of 45 million shares at a price of $18 to $21 apiece.

The delay will likely have a short-term negative impact on Hindalco, said Sneha Poddar, associate vice president at Motilal Oswal Financial Services, adding that the company remains a good pick among metal stocks as its domestic and U.S.-based business has reported strong results in the previous quarter.

"Novelis will continue to evaluate the timing of the offering in the future," the company said in a statement, without giving further details. The stock market has been open to new listings, and sources close to Novelis' attempted IPO could not explain why the company chose not to proceed.

Last month, Novelis reported a rise in its fourth-quarter core profit on strong aluminium demand and higher prices, with the long-term outlook for the company's earnings expected to increase further, as per analysts.

Analysts at AJ Bell had pointed towards the unpredictability of commodity prices which could make Novelis "hard to sell".

Hindalco shares trimmed earlier losses to last trade 1.8% lower. It was the second-biggest percentage loser on the benchmark Nifty 50 index, which is up 0.7%.

(Reporting by Manvi Pant and Gnaneshwar Rajan in Bengaluru, Echo Wang in New York; Editing by Nivedita Bhattacharjee and Eileen Soreng)