Shares of Hindustan Copper are the top losers on the Nifty Smallcap index on Wednesday after its June quarter results. The company saw revenue growth in single digits during the June quarter, while a rise in expenses led to an impact on its net profit and operational performance.

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Here are five reasons why the stock is under pressure in today's session:

One: The company's operating performance has been weak during the quarter with the margins seeing contraction on a year-on-year, as well as on a sequential basis.

EBITDA margin during the quarter stood at 25 percent, compared to 33 percent during the same quarter last year and 41 percent during the March quarter. Operating performance during the quarter was also hurt by a rise in other expenses, which increased by 48 percent from last year to Rs 175 crore.

Two: The stock hit a 52-week high on in Friday's trading session. Before today's drop, the stock had gained nearly 30 percent on a year-to-date basis. The run-up seen in the stock left little scope for disappointment, thereby triggering the fall.

Three: The run-up in the stock has also resulted in the stock not being cheap. The company's earnings per share for financial year 2023 stood at Rs 3.06 per share. The stock is now trading at over 45 times on a trailing 12-month basis.

Four: Shares also exited the F&O ban list recently which means that traders can add new positions in the stock.

Hindustan Copper is also a tightly held company. 66.1 percent stake is held by the government of India. Among the 15.89 percent stake held by domestic institutional investors, 11.6 percent stake is held by Life Insurance Corporation of India, while other shareholders include the SBI PSU Fund and the Quant Mutual Fund. FPIs also hold a 1.8 percent stake in the company.

Shares of Hindustan Copper are down 7 percent at Rs 141.9.

(Edited by : Hormaz Fatakia)

First Published:Aug 16, 2023 10:36 AM IST