Rain Industries gains 9%, hits 52-week high on the back of heavy volumes

Shares Rain Industries hit a 52-week high of Rs 179.80, up 9 per cent on the BSE in the intra-day trade on Friday, on the back of heavy volumes. At 02:14 pm, the stock was trading 6 per cent higher as compared to a 0.35 per cent decline in the S&P BSE Sensex. It surpassed its previous high of Rs 175.35, touched on February 26.

Trading volumes on the counter jumped two-fold with a combined 15.6 million equity shares, representing 4.7 per cent of total equity of the company, changing hands on the NSE and BSE till 02:15 pm, exchange data shows. In the past three months, the stock has rallied 33 per cent as against a 2 per cent fall in the benchmark index.

The petrochemicals company operates in three business segments: carbon, advanced materials and cement. The company’s carbon business segment converts the by-products of oil refining and steel production into high-value carbon-based products that are critical raw materials for the aluminium, graphite, carbon black, wood preservation, titanium dioxide, refractory and several other global industries.

Looking ahead, the management of the company is cautiously optimistic. They believe that once widespread vaccinations and herd immunity are achieved, renewed demand for their products will quickly follow, putting them back on the trajectory that the company anticipated before the pandemic.

"Among the reasons for optimism, China’s economy is roaring back after being virtually shut down at the beginning of the year due to the Covid-19 outbreak. Outside of China, growth in aluminium demand has had a stabilising effect on smelters in North and South Americas, which should spur additional volumes from US our calciners. Moreover, London Metal Exchange (LME) prices are at their highest levels since October 2018, and we are seeing increased demand from titanium dioxide producers," Rain Industries said  in December 2020 annual report.

The outlook is also promising thanks to continued growth of the worldwide electric vehicle (EV) market. EVs use around 25 per cent more aluminium than automobiles with internal combustion engines. The International Energy Agency predicts that by 2030, 26 million EVs will be sold annually – compared with 2.1 million in 2019 – representing 28 per cent of the world's new car sales.

"That, of course, would require smelters to increase their production capacity to meet rising demand, thereby requiring more CPC and coal tar pitch for anodes. The increasing popularity of EVs also presents additional growth opportunities for our PETRORES specialty coatings, including our new LIONCOAT product, which extends the life of lithium-ion batteries and enables them to maintain a prolonged charge," the company said.