06 Jul , 2022 By : Kanchan Joshi
Stocks to buy today: After copper prices hitting 17-month low on Monday, shares of electric wire maker companies have suddenly emerge as major beneficiaries of this development as falling metal prices may lead to inventory destocking and revival in private CAPEX. On account of these benefits, Polycab India, Havells India, Finolex Cables, KEI Industries, etc. shares are expected to surge and hence market experts are betting high on such copper wire maker companies.
Asked about stocks to buy today on falling copper prices, Rajesh Sinha, Senior Research Analyst at Bonanza Portfolio said, "Copper prices were in uptrend in last year and reached to Rs840 per KG in MCX in the month of April 2022. Rally in Copper was driven by demand for clean-energy investments and concerns about supply from top producers in Chile and Peru. Russia-Ukraine war also raised supply worries and drove prices up to a record high. However, since then the copper prices are on a correction mode after COVID lockdowns in China and slowing economic growth curtailed demand. Hawkish policy and recession fears in US are also dominating factor for this correction. In MCX, copper is trading at Rs. 666/KG, corrected over 20 per cent from its recent high."
The Bonanza Portfolio expert went on to add that wire and cable companies are expected to be major beneficial as copper constitutes a major portion of its raw material cost adding, "In Polycab India, copper constitutes 56 per cent of its raw material cost whereas in KEI Industries, Havells and Finolex Cables it is 35 per cent, 28 per cent and 60 per cent, respectively. With easing copper prices, we feel margin of these companies increase going forward. With lower raw material price, company has the flexibility to pass on benefit to the end customer to gain market share."
On how falling copper prices would fuel above mentioned stocks, Punit Patni, Equity Research Analyst at Swastika Investmart said, "The dip in copper prices will benefit electric wire makers in terms of the bottom line. Due to high key raw material inflation, these companies had hiked their product prices and now any fall in key raw material prices will boost their gross margins for the short term."
Advising positional investors to buy Polycab and Havells shares, Sumeet Bagadia, Executive Director at Choice Broking said, "Positional short term investors can buy Polycab India and Havells India shares and reap benefit of falling copper prices. Polycab shares may go up to Rs2250 apiece levels whereas Havells India share price is expected to touch 1225 per share levels in short term."
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