Hindalco Industries shares jump 4% on power purchase deal

Shares of Hindalco Industries surged 4% in intraday trade on Monday after the Aditya Birla Group’s flagship company signed a power purchase deal with Seven Renewable Power. The metal heavyweight has maintained an uptrend for the last five consecutive sessions and gained more than 10% during the said period.

Hindalco Industries shares opened 0.8% higher at ₹477.25 against the previous closing price of ₹473.30 on the BSE. During the session so far, the large cap stock gained as much as 4% to ₹492.25 on the back of strong volume trade. On the volume front, 4.75 lakh shares changed hands over the counter compared with a two-week average of 2.32 lakh stocks, while the market capitalisation climbed to ₹1.09 lakh crore.

At the day’s high level, Hindalco Industries' share price is 2.3% lower than its 52-week high of ₹504 touched on January 18, 2023. The stock, however, has rebounded 37% from its 52-week low of ₹358.80 hit on September 28, 2022.

The stock has delivered a 14% return to its shareholders in the last year, while it gained 18% in the six-month period. In the calendar year 2023, the metal stock has given flat returns, whereas it gained 7% in a month.

The stock price got a boost today after Hindalco informed exchanges that it has inked a power purchase agreement with Seven Renewable Power Private Limited (SRPPL) for acquisition of 26% stake in the company. The Aditya Birla Group company will buy the stake in SRPPL at a cash consideration of ₹32.5 lakh, which includes 3,25,000 equity shares at par with the face value of ₹10 each. The timeline for the completion of the acquisition is 3-6 months.

The objective of the deal is to develop and operate a captive power generation plant to supply 100 MW round-the-clock renewable energy to our Smelter located in Odisha, Hindalco said in the exchange filing.

Last month, Hindalco announced that it would invest ₹2,000 crore to establish the first of its kind copper and e-waste recycling facility in India.  In the 64th Annual General Meeting of the aluminium producer, chairman Kumar Mangalam Birla said that the recycling facility would address the mounting challenge posed by e-waste, recognised as the foremost waste stream on a global scale.

“At present, due to lack of advanced metal extraction and refining technologies domestically, a substantial volume of e-waste is exported to other nations. Bringing this cutting-edge technology to India marks a transformative step towards offering a tangible solution, aligned with your company and in fact, our nation’s circular economy agenda,” Birla told shareholders at the AGM.

Hindalco’s copper business delivered an all-time high EBITDA of ₹2,253 crore in FY23, reflecting a 62% year-on-year increase, driven by robust market demand, stable operations, and higher value-added product sales.

Hindalco has also partnered with Indian Railways and the passenger coach manufacturing ecosystem for the ambitious high-speed Vande Bharat trains. An investment of ₹2,000 crore is planned for the project and technology tie-ups are in place to bring new extrusion and fabrication technologies to India.

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