Nalco’s Q2 FY26 revenue of Rs 42.9 billion (+7.3% YoY and +12.8% QoQ) was 3% above brokerage's estimate; Ebitda at Rs 19.3 billion (+24.3% YoY and +29.1% QoQ) was 22% above estimate due to lower costs and higher alumina sales.
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Systematix Report
National Aluminium Company Ltd.’s 1 mt fifth alumina refinery stream has reached achieved 80% completion, with the remaining 20% work, primarily covering hydration and filtration tanks, electrical EPC, and process automation, expected to conclude ahead of commissioning targeted for June 2026.
We expect 25% capacity utilisation on the expanded capacity in FY27 versus management guidance of 50%.
Nalco currently sells around 1.3mt alumina externally through third-party exports after meeting the smelter requirement of around 0.9mt. We project Nalco to deliver external alumina sales of 1.25mt/1.57mt/1.88mt for FY26/FY27/FY28.
We revise our FY26/FY27 Ebitda upward by 42%/9% incorporating-
higher aluminium LME prices,
elevated aluminium realisations and premiums, and
lower cost of production driving margin gains witnessed in H1 FY26.
We introduce FY28 estimates assuming blended utilisation of 87% of the total alumina capacity of 3.3mt and value Nalco 5.5x 1HFY28E EV/Ebitda, with a revised target price of Rs 277/share. Upgrade to Buy.
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