Hindalco's prospects have brightened what with international aluminium prices firming up and demand spurting as well.

As a result, the scrip of India's largest aluminium maker climbed 1.47% to Rs 695.05 on BSE by 11:54 IST. By then, it had recovered from its intra-day low of Rs 680.35.

It reached an intra-day high of Rs 702 earlier. Volumes of close to 14,000 shares were notched up on the counter so far. Hindalco has now risen 31% from Rs 530.15 on 31 March 2003.

Hindalco has bucked the weak trend of the general market following its improved outlook and on value buying. The rise in prices at the London Metal Exchange (LME) has been responsible for the upbeat view in the stock.

In the last one-and-a-half month, aluminium prices on LME rose around $110 per tonne to $1,425 per tonne from $1,315 per tonne.

The decline in demand for aluminium from China and other Sars-affected areas has helped aluminium shipments from India. Analysts are also expecting demand to rise in the near future, and this should be followed by a rise in prices as well.

Recently, Hindalco announced that it merged Indo Gulf Corporation's copper business with itself. The merger took effect from 12 February 2003. The swap ratio was fixed at 1:12 - one share of Hindalco for every 12 shares of Indo Gulf Corporation.

Analysts call the amalgamation move a sensible one, as it will make Hindalco a larger entity with a bigger balance sheet. This should help Hindalco in garnering larger loans in its bid to acquire aluminium PSU Nalco, whenever the company comes up for disinvestment.

For the fourth quarter (ended 31 March 2003), Hindalco registered a 90% fall in net profit to Rs 19.60 crore, compared to Rs 192.20 crore in the corresponding period of the previous year. However, net sales increased by 104.03% to Rs 1,321.50 crore from Rs 647.70 crore in MQ 2002.

The profit for the quarter was lower on account of a one-time loss of Rs 146.70 crore on sale of the company's holding in Mangalore Refineries & Petrochemicals (MRPL) and a loss of Rs 16.60 crore on acquisition of the copper business from a group company.

For the year ended 31 March 2003, Hindalco posted a net profit of Rs 582.10 crore (Rs 686 crore) on total income of Rs 4,975.50 crore (Rs 2,331.40 crore).

The company's full year performance is not comparable with the earlier year due to the acquisition of Indo Gulf's copper business.

Q4 was good for Hindalco on two accounts. While the global aluminium market during the quarter was better as compared to the first three quarters, the acquisition of the copper business also led to a higher turnover.

In the aluminium business, volumes grew by 25% as compared to the same period last year as the coal supply issue was resolved (lower reliance on grid power) and capacity expansion was also undertaken during the quarter.

The promoters hold 24.37% stake in Hindalco, while the public and institutions hold 14.96% and 24.87%, respectively.