Vedanta Aluminium vs Hindalco: Key differences in business, clients and growth strategy

Vedanta Group's four demerged companies started trading on the stock exchanges this week. Out of four companies, Vedanta Aluminium Metal made a standout debut listing at a massive premium of 331% at ₹522 per share on the NSE against a discovered price of ₹121.03 apiece.

Vedanta Aluminium Metal is one of the biggest companies of the Vedanta Group, which is known for its pure-play aluminium business. The company has a market capitalisation of ₹1.84 lakh crore as of June 16 closing. The company has benefited from strong fundamentals and favourable base metal prices in recent months.

In the domestic market, Vedanta Aluminium Metal competes with prominent companies like Hindalco Industries, National Aluminium Company and others. Vedanta Aluminium and Hindalco Industries are among India's largest aluminium producers, but their business strategies, clients, and core business focus are quite different despite operating in same industry.

Vedanta Aluminium primarily focuses on upstream aluminium production, while Hindalco has a much stronger presence in value-added aluminium products and global downstream manufacturing.

Vedanta Aluminium Metal

Vedanta Aluminium Metal major focus is on the upstream aluminium production. The company mines bauxite, refines it into alumina and produces aluminium. The company primarily makes aluminium ingots, billets, wire rods, low-carbon aluminium, slabs and others, which are used as raw materials to make value-added products for different industries.

The company focuses on increasing aluminium production in a low cost manner. The company holds approximately 50% of the country's primary aluminum market and is continuously expanding its production capacity. Vedanta Aluminium generally benefits the most when global aluminium prices rise sharply because its business is heavily linked to primary aluminium production.

Some of the major clients of the company belong to the power transmission, renewable energy, automotive, construction, packaging, aerospace sectors, and electrical equipment makers. Through Vedanta Metal Bazaar, a digital-first e-commerce platform, the company allows businesses of all sizes to purchase raw materials like aluminium, zinc, and other metals directly online.

Hindalco Industries

Hindalco Industries is the flagship company of the Aditya Birla Group with market capitalisation of ₹2.19 lakh crore as on June 16 closing.

Hindalco is an end-to-end integrated aluminium company, which produces aluminium and also converts it into high-value products used by different industries. The company makes aluminium sheets and coils, beverage can sheets, foils, flat rolled aluminium products, recycled aluminium.

The company mainly caters to global beverage and food packaging brands (beverage cans), automakers (EVs, battery enclosures, and auto bodies), consumer durables. Besides this, Hindalco also has consumer and retail-facing brands in India like Freshwrapp (aluminium packaging foils) and Eternia (engineered aluminium window and door).

Hindalco benefits from both higher aluminium prices and steady demand for value-added products from different industries, making its earnings relatively more diversified and resilient. Hindalco generates a significant share of profits from downstream products, which are less volatile than commodity aluminium.

The company also owns Novelis which is the global leader in aluminum flat-rolled products and the world's largest recycler of aluminum.

Disclaimer:

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