Domestic demand for non-ferrous metals set to surge by 10% in FY2025, outpacing global growth

The demand for non-ferrous metals, including copper and aluminium, is projected to remain robust at approximately 10% in the current fiscal year (FY2025), significantly exceeding the anticipated global demand growth of around 2%, according to a report by ratings agency ICRA.

The domestic demand for non-ferrous metals is expected to rise by 10% in FY2025. This growth rate surpasses the global demand growth forecast of just 2%.

ICRA rating agency highlighted several factors contributing to this positive outlook:

Eased coal auction premiums:

The domestic e-auction premiums on coal have decreased to around 50% in April 2024, down from the peak levels of 150% in the same period last year.

Firm metal prices and benign input costs:

The ratings agency anticipates that stable input costs and strong metal prices will enhance the profitability of domestic non-ferrous metal companies.

Financial projections for FY2025

• Operating Margins: Expected to increase to around 23%, up from approximately 17% in FY2024.
• Credit Metrics: Total Debt/OPBDITA is projected to improve to 1.8 times in FY2025, from 2.0 times in FY2024.
• Interest Cover is expected to rise to 6.0 times, up from 4.5 times in FY2024.

Top 5 non-ferrous metal stock according to market capitalization

• Hindustan Zinc
• Hindalco Industries
• National Aluminium
• Hindustan Copper
• Gravita India

Senior Vice-President and Group Head of Corporate Sector Ratings at ICRA, stated, “With input costs remaining largely under check and healthy growth in realisation, the operating margins of domestic entities are estimated to rise considerably. The credit metrics are also expected to improve, reflecting the sector’s strong performance.”

The domestic market for non-ferrous metals is poised for significant growth in FY2025, driven by robust demand, controlled input costs, and firm metal prices. This favorable environment is expected to boost profitability and improve financial metrics for domestic non-ferrous metal entities, making it a promising year for the sector.