Hindustan Copper Stake Sale May Be Overvalued, Warns GoIndiastocks

Rakesh Arora of GoIndiastocks.com believes that the Hindustan Copper stake sale is overpriced and expects aluminium prices to fall in the next six months. He thinks valuations are extremely expensive, with a floor price of around ₹514 a share, about 9.5% discount to the previous close.

Arora expects aluminium prices to soften as new supply comes from Indonesia and disrupted production in West Asia returns. 'I don't see any real reason for aluminium to go back to that $3,600 a tonne,' he said. He also noted that Chinese exports of aluminium alloys have been growing rapidly.

In the steel sector, Arora is neutral heading into the July-September quarter, as coking coal costs have risen about $25 a tonne while steel prices remain roughly ₹1,000 a tonne below first-quarter levels. He expects this combination to squeeze steelmakers' margins by around ₹1,500 a tonne in the second quarter.