Hindalco shines on price hike

Hindalco Industries surged 5.69% to Rs 200.70 at 14:57 IST on BSE on reports it has raised aluminium prices by Rs 5,000 a tonne to match a global aluminium price rise driven by concern about production cuts in China.

Meanwhile, BSE Sensex was down 139.90 points or 0.84% to 16,534.42, extending last two days' fall caused by Budget blues. Traders, domestic funds and some foreign institutional investors (FIIs) are likely to be hit by a hike in short term capital gains tax on sale of shares to 15% from 10%, which amounts to a massive 50% hike in the tax rate, in Union Budget 2008-09 announced on Friday, 29 February 2008.

The change in tax treatment of the Securities Transaction Tax (STT) in the budget, meanwhile, may impact arbitrage volumes on the bourses. STT will now be treated like any other deductible expenditure against business income for the assesse. This is against the current practicse whereby an assesse gets 100% rebate for STT paid against the tax liability for the year. A fall in arbitrage will result in decline in liquidity on the bourses.

On BSE, 11.44 lakh shares were traded in the counter. The scrip had an average daily volume of 10.03 lakh shares in the past one quarter.

The stock hit a high of Rs 201.65 and a low of Rs 186.50 so far during the day. The stock had a 52-week high of Rs 223 on 15 November 2007 and a 52-week low of Rs 125.25 on 7 March 2007.

India's largest aluminium manufacturer in terms of sales outperformed the market over the past one month till 3 March 2008, gaining 7.35% compared to the Sensex's decline of 8.58%. It also outperformed the market in the past one quarter, declining 1.99% compared to Sensex's decline of 14.60%.

The company's current equity is Rs 122.71 crore. Face value per share is Re 1.

The current price of Rs 200.70 discounts its Q3 December 2007 annualized EPS of Rs 17.71, by a PE multiple of 11.33.

Aluminum futures on the London Metal Exchange (LME) jumped 29% this year after China's worst snowstorms in 50 years caused power outages and forced output cuts at smelters. Indian companies sell products at prices which are linked to the LME.

Hindalco Industries had reported 15.7% fall in net profit to Rs 542.70 crore on 2.70% fall in net sales fell 2.7% to Rs 4531.70 crore in Q3 December 2007 over Q3 December 2006.

The company is India's largest aluminium producer and is engaged in producing aluminium and semi- fabricated products

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