Marquee Investor Rakesh Jhunjhunwala digs a 'Ratna' from Government Kitty.

Marquee Investor Rakesh Jhunjhunwala digs a 'Ratna' from Government Kitty.

by 5paisa Research Team Last Updated: Oct 29, 2021 - 03:47 pm 48.7k Views

New addition to the ace investor’s portfolio as of September 2021, is a 1.4% stake in NALCO.

S&P BSE Metal Index is witnessing favourable market sentiment with 17.55% price returns in the last one month, amid higher metal prices globally. LME (London Metal) Index reached an all-time high of 4762.80 in October of 2021. It consists of six metals with aluminium accounting for 42.8% weightage.

Industry Dynamics

  • Aluminium is the second-most used metal globally, after Iron.

  • India is the third-largest producer of aluminium after China and Russia. The share of India in the world production was 5.76% during April - June 2021.

  • The principal user segment of the aluminium industry in India continues to be the electrical and electronics sectors followed by automotive, transportation, building, construction, packaging, consumer durables, industrial and defence.

This heavy captive industry is dominated by few large players that include, Vedanta, HINDALCO, BALCO and NALCO. NALCO is the only public sector player in the segment.


National Aluminium Company Limited (NALCO) is a Navratna CPSE having inte­grated and diversified operations in min­ing, metal and power. NALCO is one of the largest integrated Bauxite-Alumina- Aluminium-Power Complex in the coun­try. It is a low-cost producer of Alumina and Bauxite. In FY 2020-21, NALCO achieved the highest ever Bauxite production (73.65 lakh tons) from its captive mines, since inception.

The debt-free PSU has reported a phenomenal jump of 1990 % in net profits (Rs 347.73 crore) for the last reported quarter Q1 FY 2022 on a YoY basis, largely on account of a low base. However, the recent price hike has positively impacted the profitability of the metal producer. For the quarter, the net sales amounted to Rs2475 crore, with a 79% increase on a YoY basis.

Given the rising demand in automotive, real estate, white goods, infrastructure and others, the ever-present demand for aluminium is sustainable in the near future. This increased demand along with the forecast for LME (London Metal Exchange )to trade at 4912.82 in 12 months.

The PSU has also committed to investing around Rs 30,000 crore by the financial year 2027-28 on various expansion and diversification plans. Of this proposed investment, the company will spend over Rs 7,000 crore on the fifth refinery, development of Pottangi bauxite mines and transportation and Utkal D&E coal mines. The remaining Rs 22,000 crore will be spent on the smelter and captive power plant (CPP) expansions, which also include expansion of the company’s smelter plant at Angul district in Odisha with the construction of a 1400 MW feeder CPP.

One of the most popular figures of the Indian stock market Rakesh Jhunjhunwala bought NALCO’s shares during the September quarter fuelling the momentum in the metal space. His stake in the state-run aluminium maker is to the tune of 1.4% which have caught the attention of the retail investors.

The stocks of the PSU have touched their week high yesterday at Rs 124.75 and closed at 121.70 showing a gain of 13.1% in one trading session. The stock has since seen some profit booking and is trading at Rs 122 in the morning session on October 19, 2021.

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