Why NALCO Share Price is Falling

Sometimes, no matter how well you perform, your efforts go unnoticed. Like a batsman scoring a century in a losing match, or a chef preparing a perfect dish that gets overshadowed by a bad dining experience. The negatives outweigh the positives, leaving the good work overlooked.

That's exactly what's happening with NALCO right now. The company has delivered exceptional Q3 results, yet its stock is struggling.

National Aluminium Company (NALCO) is a major public sector enterprise engaged in the production of aluminium and alumina. It plays a key role in India's metal industry and is often seen as a barometer of the sector's health.

NALCO's share price is under focus. Even after reporting a stellar Q3 FY25 performance, the stock continues to trade in the red.

On 10th February 2025, NALCO announced that its net profit had zoomed 3 times, and earnings before interest, taxes, depreciation, and amortisation (EBITDA) surged 200.9%.

Instead of rewarding this performance, the market reacted negatively. Over the past five days, the stock price has dropped 6.8%, raising concerns among investors.

So, what's dragging NALCO's stock down?

Let's take a closer look at the factors impacting its share price.

Global Uncertainty

Last week, US President Donald Trump signed a memorandum restricting Chinese investment in strategic sectors.

As reported by Reuters, the US administration directed the Committee on Foreign Investment to enforce measures aimed at protecting national security. This decision is expected to limit capital inflows into China.

China is the world's largest consumer of metals. Any slowdown in its economy directly impacts global metal demand.

With weaker industrial activity, China's demand for raw materials such as aluminium and alumina has declined. This has led to a supply glut, pushing global metal prices lower.

As a result, companies like NALCO, which depend on stable pricing, are facing the risk of lower revenues and profit margins.

The situation is further aggravated by the lack of fresh economic stimulus from China. Investors had been expecting policy support to boost demand, but no major measures have been announced. This has weakened sentiment across the metal sector.

Adding to the concerns, the US government's move to limit Chinese investments is expected to disrupt trade flows.

With fewer foreign investments flowing into China's industrial sector, the country's production slowdown could persist for longer than expected. This raises fears of continued weak demand for metals, further dragging down prices.

With these uncertainties weighing on the market, NALCO's share price has continued to decline despite its impressive Q3 performance. The stock is unable to sustain investor confidence as global economic concerns overshadow its financial results.

NALCO's Q3 Performance

In the third quarter of FY25, NALCO reported a significant increase in net profit, which tripled to Rs 15.7 billion (bn). This surge was primarily due to higher aluminium prices earlier in the quarter and improved operational efficiency.

The company's revenue grew by 39.3% year-on-year (YoY), reaching Rs 46.6 bn. This increase was driven by strong domestic demand for aluminium and alumina.

However, a decline in global aluminium prices towards the end of the quarter has raised concerns about the sustainability of these earnings.

EBITDA rose 200.9% to Rs 23.3 bn. This improvement resulted from effective cost management and better sales realisation. The EBITDA margin expanded to 49.9% from 23.1% in the corresponding period of the previous year.

NALCO declared an interim dividend of Rs 4 per share.

What Next?

The company is actively expanding its operations. The refinery capacity expansion is a key focus area. The fifth stream of the alumina refinery is expected to be commissioned between September and December 2025.

This expansion will increase annual production capacity by 1 million (m) tonnes. Initially, 5 lakh tonnes will be produced in the first year, followed by a ramp-up to full capacity. The additional alumina output will partly support NALCO's upcoming smelter expansion.

The company plans to set up a 0.5 m tonne aluminium smelter near its existing plant. This smelter is expected to be completed by FY30. The project will include a 1,200-megawatt captive power plant.

NALCO is in discussions for a joint venture with NTPC to ensure a reliable power supply. The smelter will provide scope for value-added products, reducing dependence on global price fluctuations.

To support this growth, NALCO is increasing bauxite mining capacity. The Pottangi mines project is moving ahead, with the tendering process expected to conclude by June 2025. Mining operations are targeted to begin by late 2025 or early 2026.

The company estimates that the bauxite from Pottangi will be sufficient to support its refinery for the next 15 to 20 years.

Despite these expansion plans, concerns remain over global aluminium prices and demand. The company expects the global aluminium supply to be in a small surplus by the end of 2025.

Investors should evaluate the company's fundamentals, corporate governance, and valuations of the stock as key factors when conducting due diligence before making investment decisions.

How NALCO Share Price has Performed Recently

In the past five days, NALCO share price has tumbled 4.2%. In the last month, it is down 8.5%.

In 2025, so far, it has fallen 15.6%. However, it is has rallied 15.2% in the last one year.

The stock touched its 52-week high of Rs 263.1 on 25 November 2024 and a 52-week low of Rs 130.5 on 13 March 2024.

About NALCO

Incorporated in 1981, National Aluminium Company, abbreviated as NALCO, is a government company that operates in mining, metals, and power. It's under the ownership of the ministry of mines, government of India.

It's the country's largest integrated bauxite-alumina-aluminium-power complex, with bauxite mining, alumina refining, aluminium smelting, and casting.

The company has already commissioned more than 198 MW of wind power plants, with another 50 MW on the way, making it one of the largest producers of renewable energy among PSUs.

To know more about the company, check out NALCO company fact sheet and quarterly results.

You can also compare NALCO with its peers.

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To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Happy Investing.

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