Hindalco Hits 52-Week High On Plans To Cut Debt

On Tuesday, shares of Hindalco Industries Ltd rose 6% to hit a 52-week high of Rs 334.90 after it announced plans to trim its debt by a massive $2.9 billion by the end of 2022.

"Allocation towards growth capex is considered at $2.5-3 billion over the next five years. It will be ensured that all new investments are in line with the strategic intent of the company and the return on such investments is well above the cost of capital. The company has no large inorganic growth plans through acquisitions," said a stock exchange filing from the company on Monday after market hours.

The company's gross debt is estimated at $9.2 billion, or 3 times its EBITDA, and according to its presentation, the company aims to achieve a net debt/EBITDA ratio of 2.5 times in less than two years.

The company added that there will be an enhanced focus on higher shareholder returns. This, the company plans to achieve through higher capital appreciation arising from increased earnings, lower leverage and increased dividends.

In a separate filing, Hindalco disclosed its dividend distribution policy.

"The Board will endeavor to distribute a dividend in the range of 8 % to 10% of the Free Cash Flow at Hindalco Consolidated Level (defined as Cash Flow after meeting interest, tax, other statutory dues, maintenance capital expenditure and working capital requirements at Hindalco Consolidated Level but before considering strategic capital expenditure and debt repayments/pre-payments) of the relevant year subject to compliances of the Companies Act 2013 and all other applicable Regulations," a statement in the filing said.