On a day of dull trading, Hindalco was the star performer on the Bombay Stock Exchange with the scrip vaulting by Rs 20 to close at Rs 655 after touching an intra-day high of Rs 676. The counter clocked a voulme of 4.41 lakh on the BSE. The stock closed at Rs 652.95 on the NSE, after hitting an intra-day high of Rs 676.

``The market now believes that the company will announce a bonus in the ratio of 1:1 since it is sitting on huge reserves of Rs 3162 crore (as on March 31, 1998) while equity capital, for a capital intensive company, is remarkably low at Rs 74 crore,'' said ananalyst. In the event of a 1:1 bonus, the equity capital will rise to Rs 148 crore while reserves will go down to Rs 3088 crore. ``The company is in a pretty comfortable position to declare a bonus,'' adds Nikesh Shah, head of research, Triumph International Finance.

Hindalco has, instead, decided to augment the capacity of its 2.42 lakh smelter plant. Analysts point out that a greenfield project would not have justified return on investments since aluminium prices are expected to see a downward trend in the long-term. ``As production techniques, cost of production will come down, bringing down the prices,'' says an analyst.

The Hindalco scrip has risen from its March 12 level of Rs 398 to the current levels, which translates into a gain of 65 per cent. The buying interest in the counter is attributed to firming up of international aluminium prices.