Hindalco launches $600m QIP book at Rs 130.9/sh

Hindalco has launched its USD 600 million qualified institutional placement book. The issue priced at nearly Rs 131 a share includes a greenshoe option of USD 250 million.

Here is a verbatim transcript of Nimesh Shah’s comments on CNBC-TV18. Also see the accompanying video.

Hindalco’s QIP is finally being launched. The book is for USD 600 million, which includes a greenshoe option of USD 250 million. The issue is priced at Rs 131, which is at marginal discount to today’s closing price. The funds raised via this QIP will be largely used for capex and for debt repayment. The company is looking for a capex expansion of about Rs 25,000 crore for the next couple of years. The current debt-equity ratio for the company is 1.8:1, so part of the money will be for debt repayment as well.

Post last quarterly numbers, the management did indicate that FY10 looks challenging in terms of pricing. But a lot of brokers are betting on the Novelis' turnaround and that will be the key to watch out. The book is launched today evening at the higher end of USD 600 million. The equity dilution for Hindalco will work out to close to 12% on a pre-issue basis.