Why Hindustan Copper Share Price is Rising

Public Sector Undertaking (PSU) stocks in India have experienced a stellar surge throughout 2023, leaving their private counterparts behind.

Fuelled by a robust government capital expenditure initiative, these stocks have not only turned multibaggers but have also set new records in terms of returns and lifetime highs.

As of the latest figures, at least 13 PSU stocks have achieved multibagger status.

The S&P BSE PSU index has been a standout performer, rallying over 50% year-to-date and reaching an all-time high of 15,531 earlier this week.

In stark contrast, the benchmark Sensex has posted modest returns of just over 17% during the same period.

One such PSU that has been in recent limelight is Hindustan Copper.

The stock surged over 15% on Thursday.

Here's why...

#1 F&O Ban Lifted

Shares of Hindustan Copper Ltd. saw a significant surge of 15% on Thursday, marking its biggest intraday rise in a week. This growth can be attributed to the positive sentiment garnered from the rise in copper futures prices.

Additionally, the stock came out of an F&O ban, which further supported its upward movement.

On Wednesday, the three-month forward contract of copper on London Metal Exchanges settled 1.6% higher at US$ 8,715.

Copper future prices rose to their highest level since August as traders anticipate rate cuts by the US Federal Reserve in 2024. Lower borrowing costs typically help boost growth and in turn, increase demand for commodities.

While there are projections of an oversupply of copper next year, the Panama government's decree to shut down Anglo American Plc's plant to slash production next year offset these fears, further fuelling the rally.

#2 EV Boom Beneficiary

Hindustan Copper has reported a profit over the last 10 quarters.

As the sole listed pure-play copper company in India, the company is uniquely positioned to capitalize on the growing demand for copper, particularly in the context of the booming electric vehicle (EV) industry.

The growing shift towards electric vehicles serves as a significant driver for Hindustan Copper's current positive trajectory.

Recent reports underline that an electric vehicle requires a substantial 83 kg of copper, a stark contrast to the 23 kg needed by a conventional vehicle. This surge in copper demand aligns perfectly with Hindustan Copper's product.

Internationally, the bullish sentiment continues, with copper prices witnessing a nearly 3% rise this year.

Further, analysts are expecting prices to rise from US$ 9,000 to US$ 10,000 from the current levels of just over US$ 8,500.

What Next?

Going forward, the company is aiming to increase its copper ore production capacity.

Hindustan Copper is implementing expansion projects to increase its mine production capacity from the current level to 12.2 million tonnes per annum (MTPA) by FY 2028-29.

This increased production will cater to the growing domestic demand and potentially place HCL as a regional copper supplier.

The Indian electric vehicle market is projected to grow exponentially in the coming years, with estimates suggesting a tenfold increase by 2030. This will aid the company's sales.

Apart from this, the stock has multiple tailwinds in its favour. It's hopeful of commencing mining operations at its closed Rakha mine in Jharkhand. This mine has been closed since 2001. The state government recently gave in-principal consent to renew the lease.

Earlier this month, the Rajya Sabha also passed the Mines and Minerals (Development and Regulation) Amendment Bill. With this, the government seeks to provide a conducive legal environment to attract foreign direct investment (FDI) and junior mining companies.

The bill also seeks to allow the government to exclusively auction mining leases and composite licenses for certain critical minerals in the country.

How Hindustan Copper Share Price has Performed Recently

In the past five days, Hindustan Copper share price is up 20%. In the month gone by, the stock gained 57%.

In 2023 so far, the stock has rallied 132%.

Hindustan Copper touched a 52-week high of Rs 278.8 on 28 December 2023 and it has a 52-week low of Rs 93.8 on 16 March 2023.

About Hindustan Copper

Hindustan Copper is a government-owned corporation in the central public sector enterprise under the Ministry of Mines (India).

HCL is the only vertically integrated copper producer in India engaged in a wide spectrum of activities ranging from mining, beneficiation, smelting, refining, and continuous cast rod manufacturing.

The firm holds a lease on more than 80% of the country's copper reserves. It has well developed infrastructure facilities, vertically integrated operations, a wide distribution network and an established customer base.

To know more, check out Hindustan Copper financial factsheet and its latest quarterly results.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...