The Hindu Business Line : Re-rating pushes up Adhunik Metaliks

Adhunik Metaliks is being re-rated on Dalal Street. According to market sources, the upward revision is linked to increasing value of its mining assets. It owns iron ore mines having estimated reserves of 40 million tonnes (mt) — 25 mt in its own account and 15 mt in its subsidiary Orissa Manganese and Mineral’s name — and coalmines having estimated reserves of 42 mt. Moreover, OMM, which Adhunik acquired in September, has proven manganese reserves of 35 mt. Taking the Sesa Goa valuation as benchmark and the current price of iron ore (higher than when Vedanta bought Sesa Goa), more and more brokerages have started adding premium to — and expanded coverage of — the companies having mining assets.

At present, iron ore prices are ruling between Rs 6,000 and 6,500 per tonne and manganese ore prices are varying within a range of Rs 7,000 to 7,500 per tonne. Vendanta’s valuation of Sesa Goa was Rs 400 per tonne. By that conservative yardstick, Adhunik’s ore business alone appeared undervalued. The stock on Friday closed at Rs 168.40, representing around 9 per cent mark-up. In last one week, the stock has improved by over 11 per cent and in the last one month it has gone up by over 45 per cent. This BSE 500 and Small-Cap stock attracted a volume of 2.52-lakh shares on the exchange.

Jayanta Mallick

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