Share price of National Aluminum Company (NALCO) gained more than 8% during the intraday trades on Wednesday after strong Q3 performance reported by the company.
During the December quarter NALCO, the Navratna PSU saw its net profit increase 78% to ₹488.47 Crores as compared to ₹273.85 crores in the year before quarter Crores in the previous quarter year before quarter. In particular, the net profit increased by 137%. ₹206 crore reported by NALCO in the previous quarter.
NALCO revenues from operations at s 3346.90 crore could however grow only 1.5% year-on-year as Aluminum prices remained subdued despite the declining costs of raw materials and electricity costs. NALCO Earnings before interest tax (EBIT) improved by 69% year-on-year and 137% sequentially to ₹479 Crores.
The strong operating performance, however, was led by the Aluminum segment, which contributes almost two-thirds to the total revenues, however the Chemicals segment also saw a significant improvement in operating performance. EBIT for Aluminum segment while growing 137% sequentially and 68.5% year on year, the chemical segment EBIT also grew a lot.
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On production front, NALCO achieved strong growth with highest ever cumulative metal production of 3,45,086 MT (metric ton). Similarly, on sales front, NACLO achieved highest ever cumulative metal sales of 3,49,419 MT.
After Q3 performance and looking at an improved outlook, analysts at Motilal Oswal Financial Services increased their FY24, FY25 and FY26 estimates by 19%, 4% and 7% respectively. Shares of NALCO according to MOFSL are trading at 5.9x FY26 Enterprise Value on EBITDA estimates and 1.6x FY26 Price to Book value estimates and thus appear to be fully priced in the strong outlook according to MOFSL.
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Analysts at Axis Securities say that in January 2024, NALCO’s Joint Venture with Khanij Bidesh India Limited (KABIL) and CAMYEN SE of Argentina signed an agreement for exploration and mining of 5 Lithium brine blocks in Argentina, at an initial cost of ₹200 Cr. The stock’s valuation has re-evaluated since the news and it currently trades at 8.2x 12 months forward consensus EV to EBITDA valuations (A significant premium to the Long-term average of 4.7x).
Capex overrun to the 5th stream from the Alumina refinery remains the key risk for the core business according to analysts.
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during the first nine months of the current fiscal.
NALCO also announced 2
nd interim dividend @ Rs.2 per share for the
financial year 2023-24.
of Rs. 488 crore for the third quarter ended December 2023.
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Published: 14 Feb 2024, 12:28 IST