The share price of a metal company climbed 5.32 percent on Thursday’s early trades to touch a fresh 52-week high of ₹ 508.90 apiece on the National Stock Exchange (NSE) after it signed a technology partnership with Italy-based Metra SpA.
According to an exchange filing by Hindalco Industries, the partnership aims to enable the production of large-size aluminium extrusion and fabrication technology for building high-speed aluminium rail coaches in India. It said it will invest about ₹ 2,000 crores and use Metra SpA’s tech expertise in making coaches for Vande Bharat and other trains.
Hindalco Industries is the flagship company of the Aditya Birla Group. It is primarily engaged in the production of aluminium and copper. Moreover, it manufactures aluminium sheets, extrusion and light gauge products for use in packaging markets like beverage and food, can and foil products and so on.
The company added that the tie-up will provide it with a launching pad to drive the ambitious upgradation programme of Indian Railways, which runs the world’s largest rail network.
Extruded aluminium plays a crucial role in the railway sector as it combines weight reduction and mechanical strength. Metra is a 60-year veteran in making aluminium extrusions for the transport sector, specialising in the fabrication and machining of railway extrusions. The Italian company can design and supply high-end sub-assemblies for the railways.
The company said that while the upfront costs are marginally higher for aluminium railcars, the saving over the longer run including in rail infrastructure and carbon emissions, is significant.
With a market capitalization of ₹ 1,08,608 crores, Hindalco Industries is a mid-cap company. It has a low return on equity of 10.05 percent and an ideal debt-to-equity ratio of 0.70. Its shares were trading at a price-to-earnings ratio (P/E) of 12.88, which is lower than the industry P/E of 0.70, indicating that the stock might be undervalued as compared to its peers.
The company’s promoters hold a 34.64 percent stake in it, followed by foreign institutions with 26.25 percent, retail investors with 14.55 percent, domestic institutions with 13.43 percent and mutual funds with an 11.13 percent stake.
Written by Simran Bafna
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