Multibagger! Hindustan Copper stock zoomed 118% in just 5 months, gained 215% in a year; what lies ahead?

Shares of Hindustan Copper, a state-owned company engaged in mining copper ore in India, have been on the bull run in recent months amid the upward trend in copper prices. Over the last five months, the shares have spiked from a level of ₹143.20 apiece to ₹312.80 apiece, translating into a stellar gain of 118%.

Looking at the last one year period, it delivered a return of 215%. In the previous trading session, the stock touched a 12-year high of ₹312 apiece by rallying 12.5%. 

The company is poised to benefit from the surge in global copper prices. It is the only company mining copper ore in India with fully developed infrastructure facilities.

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Marching upwards

On Monday, copper prices surged following the expansion in China's manufacturing activity for the first time in six months. In March, the manufacturing purchasing managers index (PMI) climbed to 50.8 from February's 49.1, indicating growth in the world's second-largest economy, according to experts.

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The most-traded May copper contract on the Shanghai Futures Exchange saw its strongest daily increase in two weeks in the previous session, driven by improving demand prospects from China, the largest consumer of copper. 

Furthermore, prices were bolstered by expectations of reduced supply as Chinese copper smelters moved toward a coordinated output cut due to lower ore supplies. Additionally, the copper market has been positively influenced by speculation that the Federal Reserve could soon end its cycle of interest rate hikes.

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Copper prices continued their rally on Tuesday as the May copper contract on the Shanghai Futures Exchange added 0.4% in the morning trade to 73,140 yuan ($10,115.48) per metric ton, not far from an all-time high of 73,530 yuan touched on March 22, Reuters reported. 

Production numbers 

On the production front, Hindustan Copper has shown notable progress. During the nine months ending December 2023, mine production of copper ore increased by approximately 21%, while metal-in-concentrate production saw a 5% rise compared to the same period last year.

Hindustan Copper holds a unique position as the sole public sector undertaking involved in the entire copper production process, from mining and beneficiation to smelting, refining, casting of refined copper metal, and converting it into saleable products.

Demand outlook 

Copper demand in India is poised to grow in sync with the nation's economic expansion. Increased demand from the power sector, driven by the government's focus on renewable energy, along with rising consumer demand for durable goods, will boost the need for copper. 

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Furthermore, the emergence of hybrid and electric vehicles (EVs) will significantly contribute to copper consumption, with EVs utilising four times more copper than traditional internal combustion engines.

The demand for copper spurred by the adoption of EVs is projected to surge by approximately 1.7 million tonnes by 2027. Moreover, copper demand is anticipated to rise in the healthcare sector due to its biocidal properties.

India's per capita copper consumption is expected to rise from the current level of 0.6 kg to 1 kg in the coming years. In comparison, the average per capita copper consumption worldwide stands at 3.2 kg.

Disclaimer: We advise investors to check with certified experts before taking any investment decisions.