Why Hindustan Copper Share Price is Falling

Every now and then, a stock price surges onto the scene, turns around a lot of heads by registering quick gains, and gets everyone talking once the stock price begins to show weakness.

In recent days, Hindustan Copper has been this type of immediate hit and generated a good amount of traction among retail investors.

Shares of the company rallied over 18% in the past one month, only to fall in the subsequent sessions, erasing almost all the gains.

Let's find out why this commodity stock is showing extreme volatility on the bourses these days...

Quarterly results

Last week, the company reported its first quarter results for FY24.

Hindustan Copper posted a 17.5% decline in its net profit to Rs 472.8 million (m), primarily on account of higher expenses. Expenses rose to Rs 3.2 bn in the June 2023 quarter against Rs 2.8 billion (bn) in the year-ago period.

The company's revenue also grew in the single digits. Operating margins also contracted.

As per reports, copper prices are likely to remain volatile on weak global demand and the US dollar's movement. So, the stock could be in for a long ride before it scales a new peak this year.

F&O ban

Another reason why the stock has remained volatile in recent sessions is due to its F&O ban.

The F&O ban is a regulatory measure imposed by stock exchanges to curb excessive speculation and ensure market stability.

Shares of Hindustan Copper exited the F&O ban list last week which means that traders can add new positions in the stock.

When a stock enters the F&O ban list, it implies that new positions in the form of futures and options contracts cannot be initiated for that particular stock. This restriction is often put in place when a stock experiences exceptionally high volatility or irregular price movements.

What next?

In the past six months, shares of Hindustan Copper have seen a sharp run-up as copper prices have been on the rise.

After the sharp fall witnessed in 2022, MCX copper futures have gradually started to move up. This is more so recently on expectations of a revival in Chinese demand and growing supply risks in Chile.

MCX Copper Futures

 

Apart from this, the stock has multiple tailwinds in its favour. Its 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 one month, Hindustan Copper share price has gained 18%. In the past one year, the stock is up 27%.

Today, on 22 August 2023, the stock opened 2% higher and touched a high of Rs 140.

Hindustan Copper has a 52-week high of Rs 161 touched on 14 August 2023 and a 52-week low of Rs 94 touched on 16 March 2023.

Look at the table below to compare Hindustan Copper with its peers.

Comparative Analysis

Company	Hindustan Copper	Hindustan Zinc	Nile	Pondy Oxide	Vedanta
ROE (%)	14.2	44.5	11.3	28.6	27.8
ROCE (%)	19.6	50.1	16.0	36.7	21.3
Latest EPS (Rs)	2.3	22.2	70.5	58.6	23.7
TTM PE (x)	46.3	14.2	9.6	7.6	9.9
TTM Price to book (x)	6.2	8.9	1.0	1.9	2.1
Dividend yield (%)	0.9	24.0	0.2	1.1	43.3
Industry PE	11.3
Industry PB	2.2

Data Source: Ace Equity

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.

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...