Shares of Hindalco Industries Limited are now quoting at ₹ 625.50 apiece as the share price increased by 2.5%. The stock has been up for the sixth straight session today. Hindalco Industries is a constituent of Nifty Metal which is up 1.71% at 6,509.30 points.
This stock has given multi-bagger returns of 581%, as it soared from ₹ 91.55 per share in March 2020 to the current market price. If an investor would have invested ₹1,00,000 in March 2020, the value of their investment would have been ₹6,81,000 today!
Until 17th March, aluminium prices on the London Metal Exchange increased. The Russia Ukraine conflict caused a surge in energy prices, which in turn increased the cost of production of aluminium, which is an energy-intensive metal. Further, the sanctions on Russia which is the second-largest exporter of metal is a reason to worry as it could affect the global supply chain, as per a JM Financial report.
Aluminium is used widely in various industries and rising oil prices could increase the cost. Indian producers of the metal, like Hindalco, are better placed in this scenario as it uses coal for production. 60% of Hindalco’s coal requirement is being sourced through Coal India Limited’s linkages or captive mines.
As per the report by JM Financial, “The outlook for Hindalco remains buoyant given
- Novelis Inc. (Hindalco’s overseas subsidiary) – strong LME-scrap spreads continue
- India aluminium continues to benefit from high realizations
- enhanced coal security post addition of Meenakshi and Chakla coal mines and
- strong free cash flow generation and focus on de-leveraging (short-term working capital requirements to increase) to contain net debt/EBITDA.”
Targets
Hindalco has remained a preferred stock in the aluminium space. Bank of America Securities has raised the target price of the company to ₹715 per share on 22nd March 2022.
Financials
Hindalco Industries Limited is a large-cap company that operates in the metals: non-ferrous sector. Its key revenue segments include Copper, copper products, aluminium and other operating revenue for FY21.
In the recent quarter, it reported a 43% increase in its consolidated total income from ₹ 35281.00 crores in Q3FY21 to ₹ 50453.00 Crores in Q3FY22. It reported a profit after tax of ₹3672.00 Crores in the December quarter this year.
As of 31 December 2021 the promoters hold a 34.64% stake in the company, DIIs own 21.16% and FIIs hold a 25.99% stake in the company.
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