Company overview
HCL was incorporated in 1967 to take over NMDC's copper mines and plants. The company's core business includes exploration, mining beneficiation, smelting, refining and casting of finished copper.The company has four operating units namely Khetri Copper Complex in Rajasthan, Indian Copper Complex in Bihar (both mining cum metallurgical complex), Malanjkhand Copper Complex in M.P. (mining complex) & Taloja copper project in Maharastra (collaboration with Southwire Company, US). The company's copper reserves and resources in accordance with JORC standard are 411mn tonnes (average grade 1.05 percent) and 623mn tonnes (Average grade 1.04 percent) as on April 1, 2010, respectively, making it the largest copper company in India.
Investment arguments
Expanding capacity to fully exploit India's copper ore demand: India has a large imbalance between its smelting/refining capacity as against its copper mining capacity. Currently India's smelting/refining capacity stands at 1MTPA for which 100MT of copper ore is required (assuming 1 percent cu). Currently India's actual copper ore production stands at 3.2MTPA which is entirely produced by HCL. So in order to capitalize on this sustained demand, HCL plans to ramp up its production capacity from the current 3.2MTPA to 12.4MTPA by FY2018 at a capex of Rs 2,500cr. The company aims to expand its Malanjkhand, Khetri, Kolihan and Surda mines and Banwas Mine; further, it aims to re-open Rakha and Kendadih mines and develop new mine Chapri-Sidheswar.
Single vertically integrated player in India: HCL is the only vertically integrated player in India which has its operations span across the entire value chain. Their core operations include mining of copper ore, concentration of copper ore into copper concentrate through a beneficiation process and also smelting, refining and extruding of the copper concentrate into refined copper in downstream saleable products.
Possesses first mover advantage: Copper mining requires substantial investments and time for greenfield projects to be set up. Also many clearances need to be obtained from the Government for the same. This entails a lot of entry barriers in this industry. HCL on the other hand has all its mining complexes near the major copper ore deposits of the country. Thus any greenfield projects undertaken by the company can rely on its existing infrastructure. Moreover, HCL has applied for prospecting, mining and Reconnaissance Permit in the states of Rajasthan, Jharkhand, Madhya Pradesh and Haryana.
Valuation: "HCL is the only vertically integrated copper producer in India. However, at the OFS price of Rs 70, the stock is available at a valuation of 21.0x PE and 11.9x EV/EBITDA based on FY2012 numbers, which is expensive compared to its peers. Miners such as Coal India, MOIL and NMDC are trading in the range of 3-7x FY2012 EV/EBTIDA. Hence, we recommend investors to AVOID subscribing to HCL issue," says Angel Broking research report.
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Anda sedang membaca artikel tentang
Avoid Hindustan Copper FPO, recommends Angel Broking
Dengan url
https://rokokkanker.blogspot.com/2013/07/avoid-hindustan-copper-fpo-recommends.html
Anda boleh menyebar luaskannya atau mengcopy paste-nya
Avoid Hindustan Copper FPO, recommends Angel Broking
namun jangan lupa untuk meletakkan link
Avoid Hindustan Copper FPO, recommends Angel Broking
sebagai sumbernya
0 komentar:
Posting Komentar