Metals Stocks Shine in Indian Stock Market: NMDC Leads Gains in Nifty Metal Index

Metals Stocks Shine in Indian Stock Market: NMDC Leads Gains in Nifty Metal Index

VoM News Desk | October 12, 2023 | 05:37 PM IST | Breaking News | Follow on Google News

Metals Stocks Shine in Indian Stock Market: NMDC Leads Gains in Nifty Metal Index

Metals Stocks Shine in Indian Stock Market: NMDC Leads Gains in Nifty Metal Index

NMDC and NALCO Stocks Surge on Government’s Mineral Royalty Approval

In the Indian stock market, metals stocks have taken center stage, with the Nifty metal index surging by more than 1%. The standout performer has been NMDC, which saw its share price rise by almost 6%. National Aluminium Company (NALCO) also posted a gain of more than 4%, while Hindustan Copper saw an increase of almost 2%.

Central Government’s Mineral Royalty Rates Approval Boosts Sentiments

The central government’s recent decision to approve royalty rates of 3% each for lithium and niobium, and 1% for Rare Earth Elements (REEs), has had a significant impact on market sentiments. Investors are increasingly optimistic that the government will initiate auctions for critical mineral mines in the coming weeks. NMDC, in particular, has ambitious plans for these metals and has already secured a prospecting license for exploring lithium reserves in Karnataka. Other companies like NALCO and Hindustan Copper are also actively involved in lithium mining and are part of the joint venture known as Khanji Bidesh India Ltd (KABIL), established by the Ministry of Mines.

Positive News Flow and Rising Metal Prices

As positive news continues to circulate, it’s not just government approvals that are boosting these companies. The rebounding prices of iron ore and base metals are also playing a significant role. International iron ore prices, which were at $105 per tonne in August, are now trading at nearly $120 per tonne. NMDC has responded by raising prices for its products, with lump ore prices increasing to Rs. 5,200 per ton from Rs. 4,950 per ton. Furthermore, the company’s sales for the first half of the year have surged by 25.43% to 20.53 million tonnes. The combination of rising volumes and prices has enhanced the earnings outlook.

Analysts at Motilal Oswal Financial Services have noted that, in line with the recent surge in international iron ore prices, NMDC has implemented two price hikes in less than a month, totaling Rs. 450 per tonne. They maintain a positive rating with a price target of Rs. 170.

Outlook Improves for NALCO and Hindustan Copper

The outlook for NALCO and Hindustan Copper is also brightening, as the push for critical earth metals bolsters base metal prices. However, the sustainability of higher base metal prices remains a key factor. Analysts at Kotak Institutional Equities estimate Alumina Ebitda for NALCO at Rs. 250 crore (up 78% year-on-year, 55% sequentially) and aluminum Ebitda at Rs. 400 crore (up 109% year-on-year), primarily driven by lower costs during Q2.

VoM News Desk

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