Nalco Q3 Results Review — Peak Margins Benefiting From Alumina Prices; Systematix Maintains 'Buy'

Nalco’s performance significantly benefited from favorable alumina prices, which continued their upward trajectory during the quarter, surging by 107% YoY and 38% QoQ to $703/tonne. .NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy. .Systematix Report.National Aluminium Company Ltd.’s fifth stream 1mtpa alumina refinery expansion project in Damanjodi has achieved over 70% physical progress and is now expected to be commissioned by September-December 2025 with commercial production expected to commence in the beginning of CY27. Full ramp-up of the Utkal D&E coal blocks would help meet more than 50% of its coal requirement through captive sources. These projects not only equip Nalco with backward integration and cost efficiency but also provide notable growth drivers. Nalco currently sells around 1.3mt alumina externally through third-party exports after meeting the smelter requirement of around 0.9mt. We estimate 1.32mt/1.77mt external alumina sales in FY26E/FY27E assuming incremental alumina refining capacity achieves 50% utilization level in FY27. Our alumina price assumption is built at 17% of LME aluminium prices, in line with the long-term average. Current alumina prices of $530/tonne are at ~20% of aluminum price and we believe the markets and prices would move to attain a sustainable balance. We revise our FY25/FY26/FY27 Ebitda by +23%/-46%/-28% factoring in-a sooner-than-expected stabilization of alumina prices, a potential two to three month delay in commissioning of the 5th stream refinery, and moderate utilization of the expanded capacity in FY27. We value Nalco five times FY27E EV/Ebitda (5.5x FY27E EV/Ebitda earlier), with a revised target price of Rs 264/share. We believe the recent stock price correction has largely followed the broader market movement, discounting Nalco’s performance more than warranted, making it a suitable entry point at an attractive valuation of 3x FY27E EV/Ebitda. Maintain Buy. .Click on the attachment to read the full report:.Nalco Shares Rise On Threefold Jump In Q3 Profit.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Nalco Q3 Results Review — Peak Margins Benefiting From Alumina Prices; Systematix Maintains 'Buy'

The recent stock price correction has largely followed the broader market movement, discounting Nalco’s performance more than warranted, making it a suitable entry point at an attractive valuation

NDTV Profit

NDTV Profit

Follow Us

DOWNLOAD THE APP