Sesa Sterlite - The delta of switch to aluminum from power - Kotak

Sesa Sterlite is evaluating the commissioning of first pot-line (313 ktpa) of its 1.25 mtpa Jharsuguda smelter to better utilize its power capacity and gain on improved aluminum realization (Rupee aided). While we do not dispute the merit of a switch, gains at current LME prices will be modest, per our calculations. The smelter with its cost positioning in the lower half of the global curve, will provide SSLT an option value on large aluminum volumes on pricing uptick, given a large number of smelters globally are unprofitable. SSLT also gains from Karnataka mining restart and continued strong performance in zinc. We maintain ADD.

Source : Equity Bulls

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