Buy Hindalco for long term: Tulsian

Investment Advisor SP Tulsian is of the view that one can buy Hindalco Industries with long term perspective. Tulsian told CNBC-TV18, "The Novalis acquisition, which Hindalco made for USD 6 billion two years back was the drag for the stock price mainly because of the fixed price contract they have been carrying and all or majority of them are getting expired by the end of calendar year 2009. If you see the idea of acquiring Novalis by Hindalco, it is to convert themselves or the company from purely a commodity player to a value addition play. That means you are going from end-to-end. You will be making aluminium from bauxite and till the end you will be making use of the aluminium. First they went into the aluminium wheel and then they went into the aluminium foils but they have not been giving them a big consumption in the metal space. Now with a Novalis acquisition they will be able to have an aluminium consumption of over 2 million tonne. While their in-house capacity will not be more than 1.5 million, even if they implement all the expansions, which they have been carrying out, which will get implemented over next two-three years that will be a very big kicker.?/FONT> He further added, 揟he copper mines they have in Australia will also start contributing from hereon, the Aditya Birla Minerals in which they hold 51% stake. So I think all these things will start kicking in from FY11. We may have the pain or we may have the flat result from the company till FY10. If we take the call on the earnings, I do not think that historic earnings has any meaning because they had the losses, they had the problems, they have leveraged their balance sheet but even if I take a call of about Rs 8-9 EPS in the current year i.e. FY10, I do not think that stock is looking expensive because - on the non-ferrous metal - why we have seen a rise of about 30% in the prices of copper, led and zinc because of the depletion of inventory on the London Metal Exchange (LME). But I don抰 think that it is happening right now in case of aluminium. Still LME has an inventory of close to 3-3.5 million tonne. So once that also get start depleting, you will be having a sharp rise in the aluminium. So these two things both copper as well as aluminium will vastly improve the fundamentals of the company but no need to take a call for two-three days for the traders. If you are a long-term investor and you can have a twelve months view, Hindalco is a good buy at these levels.?