Commodity boom gave a treasury of dividend to the Center

Government’s dividend receipts touched on Tuesday 53,412.2 crore as against the budget estimate of 50,027 crore, Revised Estimate of 46,000 crore, and actual FY21 dividend receipts 39,750 crores.

“Companies like GAIL, Hindustan Zinc, Hindustan Copper, and Nalco are seeing an upward trend due to the Russo-Ukraine war as commodity prices have gone up. Units (PSUs) will benefit the government. Energy PSUs like Bharat Petroleum Corp Ltd, Hindustan Petroleum Corp Ltd were the biggest contributors. Oil and Natural Gas Corporation Limited, and Indian Oil Corporation Limited.

However, the cost of production has risen due to the Russo-Ukraine war and could potentially lead to lower profitability and therefore lower dividends, Sabnavis said. “If prices go up, there may be more momentum for the government,” he said.

Rising prices of base metals such as aluminium, copper, zinc, lead, nickel and steel have helped metal companies, as rising receivables boost operating performance and profits, leading to better dividends.

Base metal prices rose during the December quarter, with average prices on the London Metal Exchange (LME) rising by 22-44% year-on-year (y-o-y), mainly due to the easing of COVID-19 on commodities. There was positivity in the demand cycle. sanctions led.

National Aluminum Company Limited reported a net profit growth of 246% year-on-year in the December quarter. Its net profit was up 429% for the first nine months of the year.

Higher zinc and copper prices also helped the companies as Hindustan Zinc Ltd and Hindustan Copper Ltd posted significant profit growth. Both the companies had registered net profit growth of 33% and 65% respectively during the third quarter. For nine months, their profits increased by 43% and 80% respectively.

Steel prices, which may have been volatile, are still up significantly on a year-on-year basis. During the December quarter, hot rolled coil trading prices were higher by 22,523 per tonne, or 48%, year over year, while TMT prices rose 14,058 per tonne or 32% annually, according to data from Motilal Oswal Financial Services. Steel companies have raised prices in the fourth quarter and can see much better realizations.

Steel Authority of India Limited (SAIL) net profit grew by 12% year-on-year in Q3FY22, while net profit was 9,597 crore during the nine months of FY22 as compared to 406 crore during the year-ago quarter.

The outlook and prospects of these companies have improved further, given the now-record increase in base metal prices.

Aluminum prices on the LME, currently at around $3285 a tonne, have already improved by about 17% during 2022, having seen a recent peak of over $4,000 a tonne after Russia’s invasion of Ukraine.

The supply and capacity of aluminum were limited even before the start of the war. Chinese smelters faced power cuts. The Russia-Ukraine crisis has heightened the risk of a short supply of aluminum from Eastern Europe, while rising energy costs could add to the woes of aluminum makers around the world. Analysts at Kotak Institutional Equities Ltd said in their report that Indian aluminum producers are in a better position than their global counterparts, given their negligible dependence on imported coal. They have increased their Ebitda estimates for FY22, FY23 and FY24 by 5%, 25% and 12% for Nalco.

Rising zinc and copper prices will also enhance the prospects of Indian manufacturers. Besides, restricted steel supplies from Russia will help Indian steel makers to increase exports to Europe. Also, due to reduced supply of Russian steel in Asia, Indian steel companies will see higher export opportunities in Asia as well.

“The dual effect of cost curve rise and export restrictions from Russia are being felt in aluminium, zinc and steel. The impact of potential sanctions is expected in coal and nickel and the potential impact of export volumes from Ukraine is felt in ferro alloys, iron ore and steel, ICICI Securities Ltd said in a report on March 7.

Rising iron ore prices offer better prospects for iron ore producers as NMDC is raising prices for its products. International iron ore prices, which were at $100 a tonne in November, have now risen to over $150 a tonne. Hence, the income prospects for NMDC are also looking better.