State-owned miner Hindustan Copper Ltd was looking to ramp up its smelting capacity to 100,000 tonne per annum from the existing 70,000 tonnes, besides targeting a turnover of ₹2,000 crore by the end of this fiscal year. Further, the company also has an exploration plan to drill around 248,000 mt to explore deposits in its own mines at an estimated capital expenditure of Rs. 408 crore.
Why is this important?
Following the closure of Vedanta’s sterlite copper unit, there is going to be a deficit in supply of copper in domestic market. Hindustan copper has a redundant smelter facility of 30kt at Khetri in Rajasthan. The compnay is planning to encash this opportunity by renovating the non-operational smelter which will be ready by June 15. Further, HCL is also expecting its bottomline to grow by Rs. 50 crore from its secondary resources.
How this will impact the stock?
Resumption of production in Khemri smelter will add to company’s topline and bottomline without incurring any capital expenditure. The stock is likely to benefit from the same in long term.
Hindustan Copper (CMP 65.30, M Cap Rs. 6,018 crores, PE 75.58x FY18E)