Hindustan Copper shares have delivered exceptional returns with a nearly twofold surge year-to-date, but this rally extends far beyond the recent copper price appreciation, according to Parthiv Jhonsa, Vice-President at Anand Rathi Institutional. Speaking to ET Now, Jhonsa emphasized that while copper prices touching $13,000.00 per tonne on the London Metal Exchange have supported sentiment, the stock's re-rating reflects deeper structural fundamentals.

Volume Growth and Operational Visibility Drive Performance

The company has demonstrated consistent concentrate volume growth over the last four to five quarters, supported by a significant milestone in securing lease extensions. Hindustan Copper has obtained extensions for all seven mine leases across Rajasthan and Jharkhand, extending operations until 2040-2043.

Jhonsa highlighted that the rally stems from multiple factors including higher volumes, forex tailwinds, and lease certainty, rather than copper prices alone.

Sustainable Copper Price Environment

While acknowledging that copper prices may not maintain extreme highs, Jhonsa believes prices above $10,500.00-11,000.00 per tonne remain sustainable over the coming months. This outlook is supported by global supply disruptions across major producing regions including Chile, Peru, Congo, and Indonesia.

The structural supply constraints are compounded by extended mine development timelines, which have stretched to over 10.50 years on average. Additionally, declining copper grades and rising demand from electric vehicles, renewables, and AI data centers continue to support the price environment.

Ambitious Expansion Plans and Growth Projections

Hindustan Copper has set an ambitious target of achieving 12.20 million tonnes of ore capacity by FY31, representing nearly 3.50 times its current level. Jhonsa expressed confidence in this expansion plan, citing the benefits of underground mining that improves ore grades and a clear execution roadmap.

Strong Financial Growth Outlook

Anand Rathi Institutional has projected robust financial performance for the company over the FY25-FY31 period:

The EBITDA growth is expected to be aided by dollar-linked revenues and rupee-denominated costs. Notably, the company maintains a net cash-positive position, and the expansion capital expenditure is expected to be funded entirely through internal accruals without impacting deleveraging plans.

Price Sensitivity and Valuation Assessment

Jhonsa noted the company's sensitivity to copper price movements, with every $1.00 change in LME copper prices impacting revenue and EBITDA by approximately ₹45.00-55.00 lakh, assuming stable USD-INR exchange rates.

Despite the stock's re-rating, with current trading multiples of 15-17x EV/EBITDA, Jhonsa considers valuations reasonable. Given the absence of direct domestic peers, Hindustan Copper is compared to global miners, and the analyst believes the premium is justified by superior margins, return ratios, and its strategic position as India's only listed copper miner.

Long-term Growth Drivers Remain Intact

The long-term outlook remains positive, supported by fundamental demand drivers. Global copper demand is projected to rise from 25.00 million tonnes to 35.00 million tonnes, while India's per capita consumption is expected to grow significantly. The combination of improved ore grades and sustained volume growth underpins confidence in the stock's trajectory, according to Jhonsa.

Global copper markets experienced significant momentum as trading resumed after the Christmas holiday, with Hindustan Copper emerging as a key beneficiary of the sustained rally. The company's shares extended their impressive winning streak, marking the seventh consecutive day of gains amid rising commodity prices and supply-side concerns.

Hindustan Copper Extends Rally

Hindustan Copper shares surged 8.5% to ₹516.30, as the stock reached levels not seen since March 2010. The company's market capitalization crossed the ₹50,000 crore milestone during this rally, reflecting strong investor confidence in the copper sector.

Global copper prices on the London Metals Exchange approached the $13,000 mark, driving the surge in Hindustan Copper's stock price. The rally was primarily driven by two key factors: anticipated US import tariffs on copper and unplanned mine outages affecting global supply chains.

Silver Market Dynamics

Peter McGuire, Chief Executive Officer of trading.com, attributed silver's explosive rally to genuine physical shortages rather than speculative activity. The London Bullion Market, which maintains approximately $700 billion worth of gold for liquidity purposes, currently holds no silver reserves for similar events.

McGuire emphasized that decades of underinvestment in capital expenditure contributed to the current shortage, with the recent precious metals rally catching many market participants by surprise.

Geopolitical Developments

Donald Trump hosted Ukrainian President Volodymyr Zelenskyy at Mar-a-Lago following a 60-minute phone conversation with Russian President Vladimir Putin. Trump indicated that both leaders expressed desire for peace, with Zelenskyy noting that territorial concessions would be part of future discussions. Negotiators from both sides have reportedly mapped out step-by-step approaches to advance peace talks.

Market Liquidity Events

Thirteen companies are set to see their shareholder lock-in periods expire during the final week of the year, releasing shares worth approximately ₹55,000 crore ($6 billion) for trading. HDB Financial Services represents the majority portion of this release, with other companies including:

• Ventive Hospitality
• Glottis
• Ellenbarrie Industrial Gases
• Akme Fintrade
• Kalpataru
• Allied Blenders & Distillers

Defense Sector Developments

The Defence Acquisition Council, chaired by Defence Minister Rajnath Singh, was expected to approve procurement proposals worth ₹80,000 crore. Key agenda items included Embraer-based Airborne Early Warning and Control systems and integration of the indigenous NETRA AEW system, potentially accelerating fresh orders for the defense sector.

Automotive Sector Performance

Domestic auto demand remained robust in December, with VAHAN registration data showing 9% year-on-year growth for the December 1-28 period. Passenger vehicle registrations demonstrated particularly strong performance with 15% growth, while commercial vehicle registrations approached 16% growth, highlighting the continued divergence between four-wheeler and two-wheeler segments.