Vedanta has shown interest in acquiring Hind Copper as per newspaper reports
Mint: Vedanta eyes buying govt stake in Hindustan Copper.
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HCL’s physical performance:
| FY20 | FY21 | |
|---|---|---|
| Revenue (Rs. Cr) | 832 | 1787 |
| Volume sold (tonnes) | 18408 | 32997 |
| Realization per tonne of MIC | 4,51,977 | 5,41,564 |
| Ore produced (lakh tonnes) | 39.68 | 32.73 |
| Metal-in-concentrate sold (tonnes) | 26502 | 23866 |
| Yield | 0.67% | 0.73% |
- Current price of copper is Rs. 811,000 per tonne.
- The avg realization for Q3FY22 was Rs. 7,15,000 which is ~33% higher than FY21 avg realization, and despite that HCL’s EBITDA margins didn’t improve much (from 22% to 24%).
- For a mining company, the increase in EBITDA should be disproportinate with increase in realization, but that’s not the case for HCL which I think is a dampener.
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One simple doubt…Why it is valued at a price to sale ratio of 10 ??
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Anyone tracking the company, I read somewhere in invester presenation that they are increasing mining capacity to 4x, can someone provide some colour on their capex plans, structurally copper demand is very high even though world marks are in slowdown due to its inherent use in green energy and absence of any substitutes, I dont know if valuations are high because market is factoring the capex that the company has done, would be really helpful if someone could provide information related to it.
Hindustan Copper is likely to benefit from the shift toward green energy. Copper is also used in making EV components. The company has shown good profit growth. The price is not currently at its all time high. Adani and Hindalco are making investment.
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Cyclical stocks, which are those whose performance is closely tied to the economic cycle (e.g., consumer discretionary, industrials, and materials sectors), are often valued using the price-to-sales (P/S) ratio
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