A safe bet for long term - Hindalco.

>> Tuesday, December 16, 2008

Hindalco formarly known as Hindustan aluminium Company is one scrip you can peep in for long term.

The stock has tumbled drastically, but considering for a long term view it is a good bet if available within 45-49 range.

It is the targets producer of primary aluminum in Asia.

In 2007, the acquisition of Novelis Inc. a world leader in aluminum rolling and can recycling marked a significant milestone in the history of the aluminum industry in India. With Novelis under its fold Hindalco ranks among the global top five aluminum majors, as an integrated producer with low-cost alumina and aluminum facilities combined with high-end rolling.

Business - Hindalco is top manufacturer of aluminum and copper in India. Hindalco’s operations include bauxite mining, alumina refining, aluminum smelting to downstream rolling, extrusions, foils and alloy wheels, along with captive power plants and coal mines.

Positive factors - When world aluminium leaders such as Alcoa of the US and the Aluminium Corporation of China (Chalco) reported massive drops in profits in the quarter ended September 30, in our country, the government-owned National Aluminium Company (Nalco) and AV Birla group flagship Hindalco managed to report increased earnings.

Alcoa had reported a 52 per cent fall in profit and Chalco as much as 92 per cent.

This is surprising when considered that in terms of capacity, Alcoa and Chalco are much bigger than their Indian counterparts, even after taking into account the expansion plans of the firms here.

Not only is our aluminium industry not contemplating production adjustment, a metaphor for capacity resting, none of the local producers is going to put on hold its capital expenditure plans. But Hindalco has not shed any of its plans yet. That’s a biggest positive factor.

Reasons for fall in hindalco stock price

* Decline in demand for aluminum and copper.

* Acquisition of Novelis adding on to debt burden of Hindalco

* Global industrial downturn leading to lack of new business demand.

Happy Investing.

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