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Virendra Verma

MUMBAI, Aug. 5

HINDALCO Industries Ltd has declined 20 per cent since July this year. Analysts attribute this mainly to the falling international aluminium prices.

The share price was also impacted recently on account of the likely loss the company would be booking consequent to the sale of its stake in MRPL to ONGC.

The share price fell from Rs 708 on July 1 to Rs 563 on the BSE today, a fall of 20.48 per cent. Aluminium spot prices on the London Metal Exchange (LME) have fallen from $1,370 to last week's close of $1,290, a drop of around six per cent.

Share price of Hindalco has fallen despite the company announcing its decision to acquire the copper business of Indo Gulf Corporation, another Aditya Birla group company and to make an open offer for Indal.

Mr Bhavin Chheda, Equity Analyst with Pioneer Intermediaries, said: "Hindalco's financial performance is linked to the international aluminium prices. There is a time-lag of around two months for the international prices to make their impact on domestic aluminium companies."

The net profit of the company had also declined by 13 per cent at Rs 140.2 crore in the first quarter ended June 2002 compared to Rs 161.1 crore in the corresponding quarter last year. However, sales were up 6.7 per cent at Rs 586 crore (Rs 549 crore).

An analyst with another broking firm said: "international aluminium prices were lower by an estimated 10 per cent year-on-year and this affected the company's profitability".

Stock brokers said the fall in Hindalco share price was also due to the company selling its 12-per cent stake in MRPL along with group other companies. The group holds 37.5 per cent in MRPL and has decided to sell its entire stake to ONGC at Rs 2 per share. Analysts said the group would be booking a loss of around Rs 400 crore in MRPL deal. "Out of this around Rs 125 crore would be by Hindalco alone," said an analyst.

According to brokers, a leading FII has been selling Hindalco shares, which has led to an increase in trading volumes. Volumes (on the BSE and the NSE) have increased from around 20,000 shares per day to over one lakh on the bourses. Today, volumes on the BSE were 1.24 lakh shares and on the NSE 1.98 lakh shares.

A dealer said that LME prices had bottomed out and the losses to be booked in MRPL deal could be offset against the profits of the company. "This will help in reducing its tax liability and would not impact the profits as anticipated by market players," he said.

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