CMP = 38 in NSE.
Products : Aluminium and Copper. Listed for trading at London Metal Exchange (LME)
The world's largest Aluminium rolling company and one of the largest producer of primary aluminium in Asia. It enjoys a domestic market share of 42 per cent in primary aluminium, 63 per cent in rolled products, 20 per cent in extrusions, 44 per cent in foils and 31 per cent in wheels and 45% in copper. The company has delivered excellent results in the Q3 2008 with a 544.8 cr profit which is 13.35% on net sales. Its also backed by a strong management of Aditya Birla Group. Yet the stock has seen the worst in its history and is currently trading at the lowest level since 1994. It has fallen 80% in a matter of last 8 months. The major reason for such a massive fall was decreasing Aluminium prices in LME form 3200 to 1200 and decreasing copper in LME from 9000 to 3000 during the same period which was mainly due to shortage of demand following the collapse of the banking system in US. Further the Chinese demand which kept on pushing metal prices since the last 7 years also fell after the Olympics and that too accelerated the fall in metal prices.
Currently, the stock is trading at a P/E of 2.81 , EPS is 13.48 and book value of 127. At this level, the stock seems to be trading at throwaway prices. The only problem is the current loan book and it needs to be seen how they service the debt maintaining their cash flow and and at the same time keeping the order book running. With the global economy shifting its base towards China and India and considering the immense domestic demand, which is expected to increase substantially from FY2010 and Hindalco,being a major non-ferrous player, is definitely a BUY in low volumes at current levels for an expected multifold return on investment.
Technical View
The stock has collapsed completely from technical point of view. For the last couple of months, it took support at 48 levels and then at 42. Now that it has broken it, a fall is expected till 36-34. The reason is the theory of equidistant parallels. Since it had risen from 48 to 60, hence while retracing it might move all the way down 12 points from 48 and touch 36 levels. But if 36 is broken, then it might fall till. The volume has practically vanished from this stock and is slowly going through the phase of consolidation. The on-balance volume has not made a new low though the stock itself has made a new low. This shows a slow accumulation at lower levels. The time frame can be from months to years as is suggested by its history. So, investors should enter this stock partly around 36 and then at 22 (if touches). The rebound is this should be strong enough and the investor is expected to make a fortune out of this.
Products : Aluminium and Copper. Listed for trading at London Metal Exchange (LME)
The world's largest Aluminium rolling company and one of the largest producer of primary aluminium in Asia. It enjoys a domestic market share of 42 per cent in primary aluminium, 63 per cent in rolled products, 20 per cent in extrusions, 44 per cent in foils and 31 per cent in wheels and 45% in copper. The company has delivered excellent results in the Q3 2008 with a 544.8 cr profit which is 13.35% on net sales. Its also backed by a strong management of Aditya Birla Group. Yet the stock has seen the worst in its history and is currently trading at the lowest level since 1994. It has fallen 80% in a matter of last 8 months. The major reason for such a massive fall was decreasing Aluminium prices in LME form 3200 to 1200 and decreasing copper in LME from 9000 to 3000 during the same period which was mainly due to shortage of demand following the collapse of the banking system in US. Further the Chinese demand which kept on pushing metal prices since the last 7 years also fell after the Olympics and that too accelerated the fall in metal prices.
Currently, the stock is trading at a P/E of 2.81 , EPS is 13.48 and book value of 127. At this level, the stock seems to be trading at throwaway prices. The only problem is the current loan book and it needs to be seen how they service the debt maintaining their cash flow and and at the same time keeping the order book running. With the global economy shifting its base towards China and India and considering the immense domestic demand, which is expected to increase substantially from FY2010 and Hindalco,being a major non-ferrous player, is definitely a BUY in low volumes at current levels for an expected multifold return on investment.
Technical View
The stock has collapsed completely from technical point of view. For the last couple of months, it took support at 48 levels and then at 42. Now that it has broken it, a fall is expected till 36-34. The reason is the theory of equidistant parallels. Since it had risen from 48 to 60, hence while retracing it might move all the way down 12 points from 48 and touch 36 levels. But if 36 is broken, then it might fall till. The volume has practically vanished from this stock and is slowly going through the phase of consolidation. The on-balance volume has not made a new low though the stock itself has made a new low. This shows a slow accumulation at lower levels. The time frame can be from months to years as is suggested by its history. So, investors should enter this stock partly around 36 and then at 22 (if touches). The rebound is this should be strong enough and the investor is expected to make a fortune out of this.