Hindustan Copper hits over 11-year high, surges 12% on stable outlook

In the past two months, it has zoomed 55 per cent. Moreover, in the past eight months, the stock price has more than doubled by skyrocketing 124 per cent

Shares of Hindustan Copper hit over 11-year high of Rs 220.30 as they surged 12 per cent on the BSE in Thursday's intraday trade on the back of heavy volumes on stable outlook. In the past two months, it has zoomed 55 per cent. Moreover, in the past eight months, the stock price has more-than-doubled, skyrocketing 124 per cent.

The stock of the state-owned copper manufacturer was quoting at its highest level since November 2012. It had it a record high of Rs 658 on January 20, 2010.

The average trading volume on the counter more than doubled today with a combined 59.56 million equity shares of Hindustan Copper having changed hands on the NSE and BSE.

Hindustan Copper is engaged in the business activities ranging from stage of mining to beneficiation, smelting, refining and casting of refined copper metal into downstream saleable products. The company markets copper cathodes, continuous cast copper rod and by-products, such as anode slime (containing precious metals), copper sulphate and sulphuric acid.

Copper demand is expected to grow in tandem with the growth in Indian economy. The growing demand from the power sector, in view of Government laying thrust on renewable energy and increasing demand from the households for consumer durables, will increase the demand for copper in India. Manufacturers of hybrid and electric vehicle (EV) will also augment the consumption of copper as EVs use four times more copper than traditional internal combustion engines.

The market for EV is rapidly changing as leading manufacturers debut new products, battery prices drop, and Government incentives continue around the world. Copper is essential to EV technology and its supporting infrastructure.

"The evolving EV market will have a substantial impact on copper demand. The increase in the EV market will significantly impact copper demand. The projected demand for copper due to EVs is expected to increase by around 1.7 million tonnes by 2027. Copper demand is also expected to increase further in health sector due to its biocidal properties," Hindustan Copper said in its FY23 annual report.

The per capita copper consumption in India is expected to increase from the current level of 0.6 kg to 1 kg in coming years. The average per capita copper consumption of the world is 3.2 kg.

Meanwhile, Icra expects Hindustan Copper's financial performance to remain stable in FY2024 on the back of commencement of production from Malanjkhand's underground mines in FY2023.

The overall debt levels have also significantly reduced owing to prepayments/scheduled repayments done in FY2022 and FY2023, which  resulted in a material improvement in debt  coverage indicators, which are likely to remain healthy in the near-to-medium term.

"The financial performance is expected to remain healthy in the current fiscal with the commencement of production from Malanjkhand mines, resulting in higher volumes. The copper prices, despite a moderation in the recent months, remain comfortable and are expected to remain range-bound in the near term. This, along with Hindustan Copper’s stable cost of production, is expected to result in healthy cash accruals relative to debt service obligations," Icra said in its rationale.

Moreover, post stabilisation of the recently commenced mines, the company will benefit from the increase in its scale of operation and better grade of underground mined ores, which would support Hindustan Copper's efforts in reducing its production costs, the rating agency said.