Aditya Birla Group flagship Hindalco Industries Ltd on Thursday announced that it is going to sign a pact with state-owned Odisha Mining Corporation (OMC) Ltd for long-term supply of bauxite ore.

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In a notification to exchanges, Hindalco said that it would be entering into a memorandum of understanding (MoU) with OMC for bauxite ore supply for its proposed 2-million tonne alumina refinery and 150-MW captive power plant at Kansariguda in the Rayagada District.

This will be Hindalco’s second alumina refining facility in the Rayagada district of Odisha. The company said that the total proposed investment of ₹8,000 crore will be done in two phases. The first phase of 1 million tonnes is expected to be commissioned in 2026-27 at an investment of ₹5,500 crore.

Hindalco also said that the pact is subject to signing of definitive documents between the two companies.

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After the announcement, shares of Hindalco were trading flat at ₹473.30, up 0.04%, at 11:21 AM on Thursday on BSE. The stock has jumped over 17% in the past six months, but is down 3% year-to date.

For the June quarter, Hindalco had posted a 41% year-on-year drop in consolidated profit at ₹2,454 crore compared with a profit of ₹4,119 crore in the same quarter last year.

In a note dated September 20, brokerage firm Motilal Oswal reiterated its ‘Buy’ rating on the stock with a target price of ₹550.

Motilal Oswal said that capacity expansion and shift to high value-added downstream products is likely to drive profitability at Hindalco Industries.

Hindalco plans to incur a capex of $4.4 billion over the next five years for several projects, including FRP (fiber reinforced polymer) capacity expansion in the US, upstream expansion at Utkal, special alumina business capacities and downstream aluminium capacities, among others.

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(Edited by : Asmita Pant)

First Published:Oct 5, 2023 1:08 PM IST