Na­tional Alu­minium Com­pany Ltd

Money Times - - Stock Analysis | Correction Cannot Be Ruled Out -

(BSE Code: 532234) (CMP: Rs.69.35) (FV: Rs.5) By Rahul Sharma

In­cor­po­rated in 1981, Na­tional Alu­minium Com­pany Ltd (NALCO) is a Gov­ern­ment of In­dia en­tity with in­te­grated alu­minum com­plexes en­com­pass­ing baux­ite min­ing, alu­mina re­fin­ing, alu­minum smelt­ing and cast­ing, power gen­er­a­tion, rail and port op­er­a­tions. The man­age­ment plans to in­cur capex of ~Rs.1100 crore in FY19 with an aim to achieve 2.1 mil­lion met­ric tonnes (MMT) alu­mina out­put and 415 kt alu­minum metal out­put dur­ing the year. NALCO has ini­ti­ated a buy­back of its shares at Rs.75/share. Cur­rently, the stock trades be­low the buy­back price and looks at­trac­tive. Alu­minum prices are on the rise, which yields bet­ter re­al­iza­tions for NALCO. We ex­pect alu­minum prices to re­main firm in the near-to-medium term, which is a pos­i­tive for NALCO.

Key Risks: (i) Nor­malcy in im­port of alu­minum, which will bring down alu­minum prices; (ii) ru­pee ap­pre­ci­a­tion.

Con­clu­sion: With the man­age­ment’s strong fo­cus on back­ward in­te­gra­tion and on-go­ing devel­op­ment of two coal mines, we ex­pect NALCO’s EBITDA mar­gin to im­prove along with a higher turnover. We rec­om­mend this stock for a price tar­get of Rs.105.

The stock’s 52-week high/low is Rs.96.65/56.55 and its mar­ket cap stands at Rs.13404.86 crore.

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