Metal and mining stocks have delivered significant drawdowns to investors in the last few weeks as some of these stocks even crashed to their 52-week lows. The government’s decision to increase export duty on steel and iron ore products has restrained these metal players to benefit from higher international prices. Now, a retracement in commodity prices across the globe, including metals has also dented the margins of these firms which they had been enjoying so far.
However, the severe liquidation of these stocks has also thrown them to attractive valuations which is what the value seekers are now looking for. For the last few sessions, the metal pack has stopped making new lows and even started to show a bounce back. Today, Nifty Metal delivered a decent gain of 1.67% to 4,744 by the closing, with some of its constituents such as Hindalco (NS: HALC ), Hindustan Copper (NS: HCPR ) and Jindal Steel and Power Ltd having delivered a lucrative 4.12%, 3.38% and 3.27% return, respectively.
Although these stocks were the best performers of the Metal index, one metal stock has put these gains to shame with its 12% rally today, and we are talking about a lesser-known Maan Aluminium Ltd (NS: MANA ). The company is primarily interested in manufacturing aluminium profiles and its operations involve the manufacturing of basic precious and other non-ferrous metals.
In the last three years, the consolidated net income of the company has almost risen 200% - from INR 7.56 crores in FY20 to INR 14.79 crores in FY21 to INR 21.98 crores in FY22. The visible growth in the net earnings is the reason the market participants are giving a slightly higher valuation to Maan Aluminium. The stock trades at a P/E of 6.43 while giants such as Hindalco trades at a P/E of 5.38. Also, the price-to-book ratio of the company stands at 2.21, compared to 1.11 for Hindalco, but still a bit lower than the industry’s P/B of 2.5.
Image Description: Weekly chart of Maan Aluminium
Image Source: Investing.com
Today, the share price of Maan Aluminium bolstered to a high of INR 121.9, delivering a double-digit intraday gain of 12.39%, settling the day at INR 117.45. The day’s high was the highest level since 7 June 2022. The stock has risen from a very strong support zone of INR 100 - INR 103, which has been tested several times since December last year.
As long as the stock is holding this support zone, a probability of a steep downtrend seems quite less. However, as this is a major support one, a convincing break below it would probably result in a sharp downtrend.
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