Why NALCO Share Price is Rising

Share price of NALCO hit a fresh 52-week high today, after the PSU company broke multiple records in its production and sales.

In the past five days, the stock has rallied over 15%.

Investors are now wondering whether this rally has more legs and what more triggers could help NALCO continue the momentum.

Let's find out...

Highest Ever Aluminium & Bauxite Production

Last night, the company in an exchange filing informed that it has set a record and achieved the highest-ever production and sales of Aluminium and Bauxite in financial year 2024.

Here are the key numbers in bullets below -

• Highest-ever cast metal production of 4,63,428 metric tonnes
• Highest-ever metal sale of 4,70,108 metric tonnes
• Highest ever bauxite excavation of 76,00,230 metric tonnes
• Development & production at peak rated capacity of 2 million tonnes of coal

Achieving 101.2% capacity utilization, the company's alumina refinery and the captive power plant were in full force.

During the year gone by, NALCO also developed & operationalized its Utkal D coal block and produced 2 million tonnes of coal, which is the peak rated capacity of the mine.

Strong Q3 Results

While the current rally may have been triggered by stellar output and sales in FY24, shares of the company have been on a tear ever since the state-owned miner posted its Q3 results.

During the December 2023 quarter, the Navratna PSU saw its net profit grow by 78%.

The strong operating performance was led by aluminium segment that contributes almost two-third to the overall revenues.

Along with Q3 results, the company also announced a second interim dividend of Rs 2 per share.

What Next?

Several brokerage houses have raised their prospects following superb Q3 numbers by NALCO. This has put the PSU in a sweet spot.

Meanwhile, investors have also placed NALCO as a prime beneficiary of India's lithium mining megatrend.

NALCO's foray into lithium mining and battery manufacturing leverages their extensive industrial infrastructure and metallurgical expertise.

This vertical integration positions the company as a major player in the entire lithium value chain, from resource extraction to finished battery production.

In recent years, owning to high aluminium prices, the company's revenue and net profit have grown at a healthy pace.

Moreover, the company keeps breaking several records and reporting the highest-ever sales, highest-ever revenue and highest-ever net profit.

Financial Snapshot

Rs m, consolidated	FY19	FY20	FY21	FY22	FY23
Net Sales	1,14,993.20	84,718.40	89,557.90	1,42,145.80	1,42,548.60
Growth (%)	21%	-26%	6%	59%	0%
Operating Profit	32,184	7,618	19,294	48,146	26,888
OPM (%)	28%	9%	22%	34%	19%
Net Profit	17,337	1,362	12,994	29,514	14,347
Net Margin (%)	15%	2%	15%	21%	10%
ROE (%)	16.5	1.3	12.6	25.4	11.2
ROCE (%)	26	2.2	12.8	34.1	14.5
Dividend (Rs)	5.8	2.8	3.5	6.5	4.5
Debt to Equity (x)	0	0	0	0	0

Data Source: Ace Equity

Being a cyclical stock, NALCO's profits are linked to the price of aluminium. The company doubles its earnings on every US$ 400 a tonne increase in aluminium price.

NALCO also has a track record of paying consistent dividends.

Given that the company has zero debt, high free cash flows, and a rich dividend history, shareholders can expect steady dividends from NALCO going forward.

How NALCO Share Price has Performed Recently

In the past 5 trading sessions, NALCO share price has rallied more than 17%.

Today, shares of the company rallied over 5% in early trade to touch a new 52-week high of Rs 175.7.

NALCO has a 52-week low of Rs 78 touched on 4 April 2023.

In the past one year, shares of the company have rallied over 120%. In 2024 so far, NALCO shares are up 30%.

Here's a table comparing NALCO with its peers -

Comparative Analysis

Company	NALCO	Hardwyn	Hind Aluminum	MMP Industries	Palco Metals
ROE (%)	11.2	3.1	-6.9	8.6	9.3
ROCE (%)	14.5	4.3	-5.4	10.5	9.6
Latest EPS (Rs)	8.1	0.3	18.8	11.2	9.8
TTM PE (x)	20.5	104.3	2.9	23.5	9.7
TTM Price to book (x)	2.2	3.2	0.4	2.4	2.1
Dividend yield (%)	2.7	0	0	0.4	0
Industry PE	19.6
Industry PB	2.3

Data Source: Equitymaster, Ace Equity

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.

NALCO vs Hind Aluminium

NALCO vs Maan Aluminium

Happy Investing.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...