Aluminium Industry Playbook
Part of the Metals & Mining sector This playbook covers the Aluminium subindustry within the Metals & Mining sector. It provides a focused framework for anal...
Part of the Metals & Mining sector
Industry Overview
This playbook covers the Aluminium sub-industry within the Metals & Mining sector. It provides a focused framework for analysing and valuing companies in this specific segment of the Indian market.
What you will learn
- Industry Overview: How Aluminium companies operate — business models, revenue drivers, and key players in India
- Key Metrics: The 4-5 financial metrics that matter most for evaluating Aluminium companies
- Competitive Landscape: Market structure, entry barriers, pricing power, and moat analysis for Aluminium
- Risks & Red Flags: What can go wrong — regulatory, cyclical, and company-specific risks in Aluminium
- Valuation Framework: How to value Aluminium companies — appropriate multiples, benchmarks, and peer comparison
Quick navigation
| Lesson | Focus |
|---|---|
| Industry Overview | How Aluminium companies operate — business models, revenue d... |
| Key Metrics | The 4-5 financial metrics that matter most for evaluating Al... |
| Competitive Landscape | Market structure, entry barriers, pricing power, and moat an... |
| Risks & Red Flags | What can go wrong — regulatory, cyclical, and company-specif... |
| Valuation Framework | How to value Aluminium companies — appropriate multiples, be... |
Start here
Begin with the Industry Overview to understand the basic business model, then use Key Metrics to build your screening criteria.
1. Aluminium — Industry Overview
Aluminium (Metals & Mining sector)
What you will learn
How aluminium smelters and integrated producers operate in India — the bauxite-to-alumina-to-metal value chain, power cost economics (40% of cost), downstream applications, and why India has only 2-3 dominant players.
Core framework
Content source
This lesson framework is populated from AI sector research data for Aluminium. Live metrics and company comparisons are available on the entity page.
Business model segments
| Segment | Revenue contribution | Key economics |
|---|---|---|
| Primary aluminium (ingots, billets, wire rods) | 60-70% | LME-linked pricing; power cost = profitability driver |
| Alumina (merchant sales) | 10-15% | Surplus alumina sold at alumina index price |
| Value-added products (FRP, extrusions, alloys) | 15-25% | $200-500/T premium over LME primary |
| By-products (coal sales, power surplus) | 5-10% | Captive coal mine surplus; power trading |
Key players — India
| Company | Smelting capacity (MTPA) | Model | Key strength |
|---|---|---|---|
| Hindalco (Aditya Birla Group) | ~1.3 (India) + Novelis (global) | Integrated + global downstream | Novelis = world's #1 aluminium recycler; FRP for auto/cans |
| Vedanta Aluminium (Jharsuguda + BALCO) | ~2.3 | Integrated (bauxite + coal + power + smelter) | Lowest cost globally (captive coal + power at ₹1.5-2/unit) |
| National Aluminium (NALCO) | ~0.46 | PSU; integrated (Damanjodi alumina + Angul smelter) | 100% captive bauxite; alumina export surplus |
Cost structure — power is king
Aluminium smelting = solidified electricity
Smelting 1 tonne of aluminium consumes ~14,500-15,000 kWh of power. At ₹4/kWh, power alone is ₹58,000-60,000/T. At ₹2/kWh (captive coal), it's ₹29,000-30,000/T. This ₹30,000/T difference is the entire moat.
| Cost component | % of total | Key driver |
|---|---|---|
| Power & fuel | 35-40% | Captive coal-fired CPP vs grid purchase |
| Alumina | 25-30% | Captive vs imported; alumina index linked |
| Carbon (anodes) | 8-10% | Calcined petroleum coke + coal tar pitch |
| Labour & overhead | 8-10% | Scale-driven |
| Bauxite | 5-8% | Captive mines = negligible cost |
Demand drivers — India
| End-use segment | Share of Indian Al consumption | Growth driver |
|---|---|---|
| Electrical (conductors, cables) | 40-45% | Power T&D expansion, solar |
| Transport (auto, aerospace) | 15-18% | Light-weighting trend, EV content per vehicle up 2x |
| Construction | 12-15% | Window frames, structural sections, roofing |
| Packaging (foils, cans) | 10-12% | FMCG growth, pharma blister packs |
| Consumer durables | 5-8% | AC coils, cookware |
Indian context
🗣️
"Aluminium mein power cost hi sab kuch hai — jiske paas sasta coal aur apna CPP hai, woh LME ke kisi bhi level pe survive karega."
- India produces ~4 MT primary aluminium (4th globally after China, Russia, India)
- Per-capita consumption ~2.5 kg (vs global 8 kg, China 25 kg) — massive growth runway
- India is a net exporter of aluminium (domestic production > consumption)
- Government's push on renewable energy, EVs, and power T&D = structural demand tailwind
- Aluminium recycling is growing (lower energy; Hindalco/Novelis leads globally)
What to check next
- Explore company-level data on the Screener
- Read the parent sector playbook
- View AI research insights for live analysis
2. Aluminium — Key Metrics
Aluminium (Metals & Mining sector) The 56 metrics driving aluminium company valuations — cost of production (COP)/tonne, EBITDA/tonne, power cost/unit, value...
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3. Aluminium — Competitive Landscape
Aluminium (Metals & Mining sector) Market structure in Indian aluminium — effective duopoly (Vedanta + Hindalco), entry barriers from power and bauxite acces...
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4. Aluminium — Risks & Red Flags
Aluminium (Metals & Mining sector) What can go wrong for aluminium producers — LME price collapse, coal/power cost inflation, China overcapacity, carbon taxa...
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5. Aluminium — Valuation Framework
Aluminium (Metals & Mining sector) How to value aluminium companies — EV/EBITDA at normalised LME, SOTP for conglomerates (Hindalco = India upstream + Noveli...
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