Hindalco Looks Good On Metal Pack
Hindalco Industries is a on a constant uptrend, with increase in the share price headed by market anticipations that supporters may acquire shares from the open market to ward off a takeover.
The stock had gush forth on deep volumes early this month. It has been on a continued increase since then amid irregular heave in daily trading volumes. In the past one month to 22 June 2007, the stock went up 18.38% to Rs 170, as against 1.75% rise in Sensex. The stock exceeded the stock market in the last three months period also, ascending 25.4% verses 8.89% rise in Sensex.
Because of a spiky fall in the stock in February 2007-March 2007 period, the scrip underperformerd the market over the past six months, mainly after the company announced its $6-billion attainment of Canadian sheetmaker Novelis in early February 2007.
The stock has had its 52-week high of Rs 192.75 on Nov 1, 2006. It had hit 52-week low of Rs 125.25 on 7 March 2007. During the last one month, the average daily volume in the stock on BSE was 16.19 lakh shares.
According to recent hearsays that Canadian aluminum major Alcan Inc could collaborate with Sterlite Industries to bid for Hindalco. That’s why A V Birla group, the promoters of Hindalco Industries, may raise its stake in the company to defend against a takeover.
Now, promoters have 31.05% stake in Hindalco after the company’s preferential allocation of 6.75 crore shares to promoters in April 2007 at Rs 172.87 a piece. In addition to preferential issue of shares, Hindalco also assigned 8 crore sanctions to promoters in April 2007. Each warrant can be transformed into one equity share, in one or more portions before the finishing of 18 months from the allotment date.
While announcing its Q4 March 2007 results on 4 May 2007, Hindalco stated that it anticipates strong metal prices to carry on. Its net profit climbed up 15% to Rs 721.30 crore in Q4 March 2007. Sales climbed up 30% to Rs 4748.90 crore. Net profit surged 55% to Rs 2564.30 crore in the year ended 31 March 2007. Sales soared 61% to Rs 18313 crore in FY 2007.
Hindalco finished the Novelis takeover in May 2007, paying $3.5-billion in cash for stock and assuming debt of $2.4 billion. Hindalco’s current price of Rs 170 discounts its FY 2007 EPS of Rs 25 by a PE multiple of 6.80.