Bargain hunting in a dull market propped up the scrip of the country's largest aluminium maker Hindalco. The stock closed at Rs 642.90, up 4.15 per cent but slightly off its intra-day high of Rs 645 on the Bombay Stock Exchange.
"The stock has been beaten down in the past few days and currently the valuation looks attractive which has prompted a buying frenzy at the counter," an analyst said. Hindalco has lost 16.6 per cent between December 10, when it closed at Rs 740, and December 20 (Rs 617.30). During these 10 days, volumes decreased to 38,479 shares from 51,385 shares.
The news that Indal, a subsidiary of the Hindalco group, is expected to acquire an additional stake in Utkal International Aluminium (from Norsk Hydro of Norway) has also probably aided the upbeat sentiment. Hindalco has around 74 per cent stake in Indal, analysts said.
Analysts also feel that reports of the A V Birla group company's proposal of doubling the capacity of its aluminium wheels plant to 6 lakh wheels per annum may have buoyed market sentiment. Hindalco is eyeing a strong foothold in the value-added wheels segment what with the automobile industry slowly shifting to aluminium wheels. In the past, car makers have been importing alloy wheels from Taiwan and Korea.
Hindalco's alloy wheels, under the brand name Aura, are manufactured at its Silvassa plant with technical assistance from Stahlschmidt & Maiworm of Germany.
Hindalco has already got orders from Fiat for its Palio range of car wheels and is in talks with Ford and Maruti. They will also be retailed through the distribution network across the country, which is already in place. The company also exports wheels to countries such as South Africa, Egypt and the UAE, and will soon foray into the European markets.
Analysts say that with the scenario looking good for the aluminium industry and the company which has prompted value buying in Hindalco shares.
