Hindalco strengthens after block deal

Hindalco Industries jumped 9.76% to Rs 66.35 at 14:53 IST on BSE, after a block deal of 5.24 lakh of equity shares was struck on the counter on BSE at Rs 66.

Meanwhile, the BSE Sensex was up 487.67 points, or 4.89%, to 10,451.96.

On BSE, 91.33 lakh shares were traded in the counter. The stock had an average daily volume of 22.55 lakh shares in the past one quarter.

The stock hit a high of Rs 68.75 and a low of Rs 61.50 so far during the day. The stock has a 52-week high of Rs 202.74 on 15 November 2007 and a 52-week low of Rs 38.05 on 27 October 2008.

The mid-cap stock had underperformed the market over the past one month till 7 November 2008, declining 36.23% as compared to the Sensex's decline of 14.80%. It had also underperformed the market in the past one quarter, declining 53.11% as compared to the Sensex's decline of 34.09%.

The company's current equity is Rs 175.32 crore. Face value per share is Rs 1.

The current price of Rs 66.35 discounts the company's Q2 September 2008 annualized EPS of Rs 23.47, by a PE multiple of 2.83.

As per recent reports, the company took a $3.03 billion bridge loan at a rate of 80 basis points over LIBOR to fund Canada's Novelis acquisition. The bridge loan was fully repaid on Thursday, 6 November 2008.

Hindalco Industries' Rs 5,047.7 crore rights issue which opened on 22 September 2008 will lead to a sizeable 42.8% equity dilution, thereby stemming earnings per share. The company will issue rights shares in ratio of 3:7 priced at Rs 96 per share to existing shareholders. The rights issue was priced far below its intrinsic value (IV).

Hindalco Industries' net profit rose 12% to Rs 719.95 crore on 14.4% increase in net sales to Rs 5683.18 crore in Q2 September 2008 over Q2 September 2007.

Hindalco Industries is India's largest aluminium producer and is engaged in producing aluminium and semi- fabricated products.