Expect Hindalco to rise 40-50% from current levels: Tulsian

Investment Advisor, SP Tulsian is of the view that one can at least see a further rise of 40-50% in Hindalco Industries from the current levels in 6-8 months.

Tulsian told CNBC-TV18, " I think all the negative things started in the company, when the promoters did not convert their warrants and the rights issue devolved both things happened on the same time on October 10. Obviously Rs 96 was very high price, even the secondary market was Rs 80 but since then, in fact the fall from Rs 80 to Rs 40 or whatever level, which we are referring may be Rs 36-35 has mainly come by selling by the under writers. There were 22 under writers and all of them have dumped the stock by making a loss to the extent of over 30-40%. Probably I think that was the last straw that may be whatever negative news we had in the market or in the stock has come, since then may be I think in less than three days, if you see the effective working, I think on Monday the stock touched the low of Rs 40 and today we are seeing Rs 66 almost a rise of close to may be 60% or more than 65%. Probably this share will inch back to the three-digit mark in the next 6-8 months, it is definite that these cycles or the metal cycle is on a downturn."

He further added, "The aluminium prices have fallen to USD 2,000/tonne but this company is in a very interesting place because with a fall in aluminium prices Novelis the company which they have acquired and for which they have made the rights issue will stand to gain, while the domestic operations will get marginally effected because of the lower realizations of the aluminium. Same thing is happening with copper but whatever bad has to happen has happened. But in the next 6-8 months one can expect three digit price in the stock. From here on there are very low chances of again share even slipping below Rs 60 because the fundamental and the massive selling by the under writer has resulted in the share’s price to fall to Rs 40 levels, which we will not see happening again may be technical correction of Rs 5 here and there is not too material for the stock but yes, it has upside potential from here on, and as I said that from 6-8 months one can at least see a further rise of 40-50% from the current levels."

Disclosure: The analyst has holdings in Shree Renuka, Hindalco, Ranbaxy.

Source: Moneycontrol