Commodity and Cyclical Plays


(ashutosh_shah) #665

have joined your advisory, waiting for some amazing research reports from your side.
All the best Jiten Sir. :slight_smile:


(josephseby) #666

Sir, being an expert in cyclical commodity stocks i have a doubt to ask you.

In my childhood days we used to buy unbranded salt, but now we are buying branded one. ie now salt has been become an FMCG item rather than a commodity. But still we are buying unbranded sugar. Recently when I went to the local supermaket owned by my cousin, I found one rack fully loaded with branded sugar. I enquired about it with him and he said that there is a very good responce for it. Our town is a small C class town in Kerala which consists of 99.9% middle and lower middle class people. (I am not specifying the brand as you have started advisory firm and it will be difficult for you to comment on a particular stock.) I feel a shift is happening in the behavior of consumers. I cant understand that if we are ready to buy branded salt, why should we not buying branded sugar.(Not forgetting that branded salt got the biggest push from the iodized salt drive for the fight against goiter from various health organizations and the govt

So I feel if there is going to be a change in customer preference from unbranded sugar to branded one, the sugar sector will become an FMCG segment rather than a commodity one and market may assign FMCG valuations for the sector rather than a commodity valuation
Pls share your views. Thanks in advance


(Jiten Parmar) #667

I think it will take quiet a long time for this to happen.


(Amit) #668

VEDANTA - Q1 FY19 (Cons)

Net Revenue at 22,206 Cr
18,285 Cr (21.4%) YoY | 27,630 Cr (-19.6%) QoQ

Net Profit of 1,533 Cr
1,501 Cr (2.1%) YoY | 4,802* Cr (-68.1%) QoQ

EPS (in Rs.) 4.13
4.04 YoY | 12.95 QoQ

*Distribution Tax credit

Good war chest of cash and liquid equivalent of 35k crores. Nos on face of it looks above average…copper sale is down, need to see mgmt commentary…


(Amit) #669

Cabinet Approves

Reducing Stake In Hind Copper To 66.13% From 76.05% Earlier.


(Raj A A) #670

Hind Copper to Invest ₹5,500 cr for Expansion
[email protected]

Kolkata:

Hindustan Copper (HCL), the country’s only integrated copper producer, on Thursday said it will utilise funds from issue of fresh equity shares to expand mine capacity nearly six times. This will be part of the company’s plan to spend ₹5,500 crore over the next six years on expansion.

A day earlier, the Cabinet had given its approval for issue of fresh equity shares amounting to 15% of equity capital in HCL, which is tipped to raise ₹900-1,000 crore through qualified institutional placement (QIP). In the absence of budgetary support for the expansion plan, the fund raising plans, which will be a mix of equity, internal accruals and debt, are critical for HCL to achieve its production target of about 190,000 tonnes of metal-in-concentrate. Internal accruals are likely to be about ₹300-500 crore per year within the span of six years.

The company said capital expenditure plan for mine expansion along with a further investment of ₹175 crore on exploration activities spread over three years will increase availability of copper and enable HCL to meet 30% of the country’s demand for copper, up from 4% now.

This will also help reduce the country’s dependence on imports to the extent of 25% of copper mineral.


(Amit) #672

World’s biggest miners want more copper, but nobody’s selling


(Manohar T. Patil) #673

Just checked the Mutual Fund holding and Insider trading report for Nalco from Value Research.

  • ICICI prudential seems to have acquired sizable chunk from Govt of India in Jul’18 thru offline transfer
  • Franklin and Mirae acquired maiden holding furing Jun quarter
  • Large MF holders(ICICI, Reliance) have increased holdings

Nalco

Disc- Invested


(phreak) #675

Nalco has posted very good numbers. Revenues up 55% and PAT up 425% on the back of great margins on Alumina exports.

Disc: Invested


(Gaurav Agarwal) #676

Are these results one-off due to short term effect of higher alumina prices due to Rusal sanctions by US?

Do you these kind of results are possible into future? What are you estimates for FY19?

Thanks


(Gaurav Agarwal) #677

According to q1fy19 results and press release. Alumina realization per kilogram for Nalco is Rs. 64 compared to Rs. 39 for fy18.

1

This is close to $927/ton, compare this to average Alumina price on Shanghai Metals Market today’s rate of 2960 Rmb/mt which converts to $435/mt. Quite a difference.

Am I doing some mistake in calculation?


(phreak) #678

As per exports data for “Aluminium and products of aluminium” (I assume alumina exports would be part of this), May and June saw realisations of Rs.178 and Rs.180/kg respectively.

Realisations should come down in the coming months as the prices have softened since. The thing is, during May and June, Nalco must have made the most of the prices, as the volumes as well were at an all time high

See the volume growth of 41% and 52% in May and June when realisation growth was around 24%. Lets see how the July numbers look. It should come in 10 days time.


(Jiten Parmar) #679

These might not be repeatable. But cycle still looks good. Even NMDC reported decent nos. Margins have gone up.


(Gaurav Agarwal) #680

Even then the price quoted for Alumina by Nalco @ $927/ton compared Shanghai Metal Market price of $435/ton seems unrealistic/unbelievable to me. Can you suggest some way/source to check local/Indian Alumina prices?

Thanks


(phreak) #681

Hi Gaurav,
This is an article from April

“The Chinese companies are hoping to cash in on surging alumina prices. An alumina cargo bound for Brazil for May delivery sold at $800 per tonne on Wednesday, said Wan.”

So the price seems to have been 800 USD in April. If you notice the realisation numbers i posted, May and June prices were higher by about 10% than April, so its not unrealistic I think for Alumina prices to have been 15% higher than this number is April which gives 920 USD that is closer to the figure Nalco has realised.

Clearly these figures are not sustainable and I won’t be surprised if the Alumina revenues drop by 40-50% in the current quarter.


(Amit) #682

Good nos by HindCopper

Hindustan Copper Q1 Revenue From Ops Rs 422 Cr Vs Rs 421 Cr, up 0.2% YoY

Net Profit of 35.26 Cr
10.21 Cr (245.3%) YoY | 21.92 Cr (60.9%) QoQ

Increasing Mine output/capacity/expansion is key as top line is flat. Appears to be good price realization on copper

Hindustan Copper to spend Rs 5,500 cr on expansion


(naravi2011) #683

Hindustan Copper Results Link:


(Gaurav Agarwal) #684

Hi,

The realization listed in tables in your other posts are for Aluminum only. I do not know we can derive any credible information for Alumina from that data.

During Rusal sanctions for few days few shipments may have fetched $800/ton but Nalco reported realization of $1000/ton for three months (Apr,May,June). I am not convinced.

Can you independently check/verify my calculations?


(saumya) #685

Copper “Dr copper”


(Amit) #686

If the trade war contagion is contained by sane minds then we could possibly see a rebound.

https://www.bloomberg.com/news/articles/2018-08-15/base-metals-prices-mixed-as-investors-follow-talks-at-escondida