In today’s briefing:
- Relative Value Opportunities in Asia-Pac, Pair Trade Roundup (10 Nov)
- NALCO — Margin Peak Sustained, Volume Upside from FY27
- Fenix Resources (FEX AU): Pullback With Iron Ore Prices And Attractive Entry Point
- Comex-LME Trade Back In The Spotlight, Spread To Widen Again
Relative Value Opportunities in Asia-Pac, Pair Trade Roundup (10 Nov)
- Context: This Insight follows up on previously highlighted relative value opportunities, using a statistical methodology based on mean-reversion to identify opportunities in paired securities.
- Highlights: Currently 14 pair trade opportunities across four markets and five sectors persist.
- Why read: Statistical analysis offers a unique perspective on relative value. Gain insights into actionable statistical pair trade opportunities and monitor performance of previously highlighted pairs.
NALCO — Margin Peak Sustained, Volume Upside from FY27
- Record margins sustained: Q2 FY26 EBITDA ₹1,932 cr; full-year margins near 49% on captive coal and lower caustic costs.
- Growth visibility: 1 Mtpa 5th-stream alumina refinery to commission by Jun 2026; Pottangi mine start by FY27.
- Valuation gap: Trades at ~4× EV/EBITDA vs 6–7× peers, with ₹7,900 cr cash and 4.5% yield supporting 25–30% re-rating potential.
Fenix Resources (FEX AU): Pullback With Iron Ore Prices And Attractive Entry Point
- Fenix Resources (FEX AU) has pulled back 25% from its recent highs, as iron ore prices have fallen 6% from their highs, amid the Simandou project nearing completion.
- Despite the negative sentiment, with steel mill margins hovering around -300 RMB/ton, we still see iron ore at 95-110 USD/ton, as China’s imports were a record in September.
- We like Fenix Resources (FEX AU) and are pounding the table on the name. Read our recent update, Fenix Resources (FEX AU) Q1 FY26 Report: Multibagger In The Making
Comex-LME Trade Back In The Spotlight, Spread To Widen Again
- The US administration’s addition of copper to the critical minerals list, with a likelihood of a blanket 15% levy, has widened the spread between COMEX and LME once again.
- Earlier, Trump had destroyed the spread in July by backtracking on the 50% tariff on copper, limiting it to value-added (see: COMEX Spread Destroyed By Trump, Long-Term Copper Still Great).
- We are bullish on copper. Recent supply shocks will push prices upwards to 12k USD/ton by year-end (Copper To End The Year with Seasonal Strength: Onward To 12,000 USD/Ton )
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