OPEN APP
Home / Markets / Stock Markets /  2/3rd Nifty Metal stocks turned multibaggers in the last 1 year; here's why

2/3rd Nifty Metal stocks turned multibaggers in the last 1 year; here's why

Metal stocks have been in focus in the last one year with the Nifty Metal index rallying over 150% in this period as against a 55% rise in the benchmark Nifty. (Photo: Reuters)Premium
Metal stocks have been in focus in the last one year with the Nifty Metal index rallying over 150% in this period as against a 55% rise in the benchmark Nifty. (Photo: Reuters)

10 out of the 15 constituents of the Nifty Metal index have turned multi-bagger in the last 1 year, rising between 100% and 400%. Let’s understand why the sector is in demand

Listen to this article

10 out of the 15 constituents of the Nifty Metal index have turned multi-bagger in the last 1 year, rising between 100 percent and 400 percent. Let’s understand why the sector is in demand.

Metal stocks have been in focus in the last one year with the Nifty Metal index rallying over 150 percent in this period as against a 55 percent rise in the benchmark Nifty. The uptrend in the metal index has been on the back of rising base metal prices amid increasing demand as the economy opens up after the COVID crisis. A rise in metal prices will push realisations higher and thus improve their profitability.

Further, many industries like real estate, auto rely heavily on the metal sector and a rise in demand in related sectors as well will prove to be beneficial for the metal companies.

The issues in China like declining metal demand, production cuts due to power shortages as well as the Evergrande issue are also potential opportunities for the Indian metal companies.

"With the Evergrande issue and power shortages clouding Chinese metal demand outlook, production cuts and easing policy measures would be key to support market balances and prices," brokerage house Jefferies explained in a recent report.

Going ahead, an increase in India's infrastructure development with a focus on smart cities, rural electrification, renewable energy products, etc, the demand of the metal space will continue, making the sector a good investment opportunity.

The past year's performance of the Nifty Metal index also showcases investors' rising interest in the sector. It not only outperformed the benchmark Nifty but also most of the other sectors.

Of the 15 constituents of the Nifty Metal index, 10 have turned multi-bagger in the last 1 year, rising between 100 percent and 400 percent.

Let's take a look at some of these stocks:

Adani Enterprises: This stock was the best performer in the Nifty Metal index in the last 1 year, rising over 400 percent in this period. In the June 2021 quarter, the company reported a net profit of 266 crore against a loss of 66 crore in the year-ago period. Meanwhile, the consolidated revenue grew over two-fold YoY to 12,579 crore. Just in 2021 (YTD), the stock is up 230 percent. It has a market cap of 1.7 lakh crore and EPS of 6.4. Its price-to-earnings ratio stands at 240.79.

Hindustan Copper: This stock jumped over 300 percent in the last 1 year and 136 percent in 2021 YTD. Recently, the stock has been in focus as the government is considering full divestment of its 60.4 percent stake in the firm. In Q1, the firm reported a 53.6 percent YoY rise in consolidated net profit at 45.63 crore. It has a market cap of 11,500 crore and an EPS of 1.3. Its price-to-earnings ratio stands at 91.30.

NALCO: The stock surged 260 percent in the last 1 year and over 150 percent in 2021 YTD. Nalco reported a significant rise in consolidated profit at 347.73 crore in Q1 versus 16.69 crore in the year-ago quarter. The consolidated income increased to 2,506.29 crore from 1,413.92 crore in the year-ago period. The company has integrated and diversified operations in mining, metal and power. The central government holds 51.28 percent equity in the firm.

Vedanta: The stock rose over 250 percent in the last 1 year and over 120 percent in 2021 YTD. In Q1, the firm reported a 314 percent rise in its net profit at 4,280 crore versus 1,033 crore in the year-ago quarter on the back of higher revenues and better commodity prices. The continued rise in commodity prices is likely to prove beneficial for the firm. Recently, Credit Suisse also upgraded the stock and increased its target price by 47 percent showcasing a potential opportunity in the firm.

SAIL: The stock rose nearly 240 percent in the last 1 year and over 60 percent in 2021 YTD. In Q1, it reported a consolidated net profit of 3,897 crore as against a loss of 1,226 crore a year ago. Founded in 1973, the maharatna company has a market cap of over 49,000 crore.

Apart from these, Tata Steel jumped over 230 percent, APL Apollo Tubes rose 195 percent, Hindalco added 175 percent and JSW Steel and JSPL advanced over 110 percent each in the last one year.

The remaining 5 stocks - NMDC, Ratnamani Metals, Coal India, Hind Zinc and Welspun Corp, of the Nifty Metal index, also gave positive double-digit returns to its investors rising between 20 percent and 75 percent.

Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.

Never miss a story! Stay connected and informed with Mint. Download our App Now!!

Close
×
Edit Profile
Get alerts on WhatsApp
My ReadsRedeem a Gift CardLogout