Today's Opening - 202
Today's High - 203
Today's Low - 197
Today's Closing - 199
Today's Closing - 199
I am writing on this stock after almost one-and-half years.
Three continuous days of negative closing with today's volumes on the higher side. The stock has touched lower lows on all the three days.
For the first time since 20th Sep 2018, the 14-day Positive Directional Index has turned stronger than the Negative Directional Index over the past five days.
The 10-day Rate Of Change has been positive since 27th Feb. The 10-day Momentum too has been positive since 27th Feb.
The 20-day Commodity Channel Index has turned positive since 5th March. While the closing has been below the 5-day Exponential Moving Average since 8th March, the gap has narrowed down drastically since 20th Feb.
The 2-day Relative Strength Index has stayed above 50 for the past five sessions. The 12, 26-day Moving Average Convergence Divergence has climbed up to almost zero over the past five sessions..
The 2-day Relative Strength Index has stayed above 50 for the past five sessions. The 12, 26-day Moving Average Convergence Divergence has climbed up to almost zero over the past five sessions..
Corporate Activity:
The December quarter saw a steep fall in the international metal prices. This led to cheaper imports, adding to the woes of Indian manufacturers like Hindalco.
Aluminium which accounts for almost 50% of Hindalco's standalone revenue, was impacted due to drop in international prices by 6.4% on a YoY basis during the Q3 quarter. Moreover, sale volumes dropped marginally by 0.6% compared to same period in the previous year.
In its copper business, sales fell by 2.9% in Q3 FY 19 on a YoY basis. The impact was even higher due to the international copper prices dropping close to 10% in the Dec quarter.
Group company Novelis however, reported a revenue growth of 3.4% during the quarter YoY. The company also saw an improvement in profitability, with EBITDA per tonne rising 5.2%. The result is that in Q3 FY19, Novelis' EBITDA stood at Rs 2,300 crore, which is higher than Hindalco's standalone EBITDA of Rs 1,926 crore.
With regards to its recent acquisition of Aleris, the regulatory approvals are still pending and the transaction is expected to be closed by Q2 FY 20.
The December quarter saw volatility in metal prices on trade war concerns. Metal prices have stabilized after that. While there could be more volatility in light of concerns over global economic growth and trade war concerns, the supply side situation and low inventory in the non-ferrous space should protect the downside.
Core business aside, the company will also have a Rs 6,500 crore outgo on the rights issue of Idea.
Stock Movement:
The December quarter saw a steep fall in the international metal prices. This led to cheaper imports, adding to the woes of Indian manufacturers like Hindalco.
Aluminium which accounts for almost 50% of Hindalco's standalone revenue, was impacted due to drop in international prices by 6.4% on a YoY basis during the Q3 quarter. Moreover, sale volumes dropped marginally by 0.6% compared to same period in the previous year.
In its copper business, sales fell by 2.9% in Q3 FY 19 on a YoY basis. The impact was even higher due to the international copper prices dropping close to 10% in the Dec quarter.
Group company Novelis however, reported a revenue growth of 3.4% during the quarter YoY. The company also saw an improvement in profitability, with EBITDA per tonne rising 5.2%. The result is that in Q3 FY19, Novelis' EBITDA stood at Rs 2,300 crore, which is higher than Hindalco's standalone EBITDA of Rs 1,926 crore.
With regards to its recent acquisition of Aleris, the regulatory approvals are still pending and the transaction is expected to be closed by Q2 FY 20.
The December quarter saw volatility in metal prices on trade war concerns. Metal prices have stabilized after that. While there could be more volatility in light of concerns over global economic growth and trade war concerns, the supply side situation and low inventory in the non-ferrous space should protect the downside.
Core business aside, the company will also have a Rs 6,500 crore outgo on the rights issue of Idea.
Stock Movement:
In my post on 27th Oct 2017, when the stock was at 270, I had mentioned that the stock is losing positive momentum and might not rise further as it had a strong resistance at 279. The stock tried breaking the 279 barrier multiple times during 3-8th Jan 2018 but could never sustain and has only been dropping since then. Hindalco has lost almost 19% over the past nine months and actually hit a multi-year low of 182 on 15th Feb. The stock has a strong support at 193-194. Once broken, the stock can again go back to test the previous low of 182. However, few of the technical indicators are giving signs of a revival in the stock. The stock has an immediate resistance at 207-208 and the next resistance is at 212-213. Keep accumulating from a long-term perspective.
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