Multibagger Alert: This Navratna CPSE has given returns of 146% in the past year!

resr 5paisa Research Team 13th December 2022 - 09:05 pm
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The company brownfield expansion is expected to be significantly value-accretive.

National Aluminium Company Limited (NALCO), a Navratna CPSE under the Ministry of Mines has given investors stellar returns of 146.53% over the last year. The share price of the company stood at Rs 46.10 on January 14, 2021, and since then, it has more than doubled investor wealth.

Headquartered in Bhubaneswar, NALCO engages in the manufacture and sale of metallurgical grade alumina. It operates through the segments of chemical and aluminium. The chemical segment includes calcined alumina, alumina hydrate, and related products, while the aluminium segment covers the aluminium ingots, wire rods, billets, strips, rolled, and related products.

NALCO's Q2FY22 performance was strong on all fronts. Revenue stood at Rs 3592.18 crore, up 51% YoY and 45% QoQ. Alumina production for the quarter came in at 0.53MT (up 9% YoY and 2% QoQ), while alumina sales stood at 0.32MT (up 11% YoY and 12% QoQ). Aluminium production for the quarter was 114KT (up 8% YoY and flat QoQ) and sales were 126KT (down 5% YoY and up 38% QoQ). Higher power & staff costs and higher other expenses were largely offset by better metal sales and realizations. Alumina prices have rallied to about USD 450/t since the end of Q2FY22 and even touched USD 500/t. As a result, PBIDT (Ex OI) rose 308 YoY YoY and 94% QoQ to Rs 1127.27 crore, while margins expanded massively to 31.38% in Q2FY22 from 11.62% in Q2FY21 and 23.47% in Q1FY22. This led to a 595% growth in the bottom line which was reported at Rs 747.70 crore in Q2FY22.

Aluminium has continued to see a commodities boom as a result of the massive stimulus spending by governments across the world and pandemic-induced relaxed monetary policies, increased investments in green technologies and increased consumption in China to support green technologies while also limiting production to decrease carbon emissions.

NALCO’s alumina operations demonstrated high levels of profitability on the back of low-cost captive bauxite availability and its 1MT alumina brownfield expansion that is expected to be significantly value-accretive for the company and will likely commission by FY24. Meanwhile, its captive Utkal D & E coal blocks in Odisha have also got delayed but should commence output in FY23, helping reduce its coal costs.

At 3 pm on Monday, the stock of NALCO was trading at Rs 110, down by 3.21% or Rs 3.65 per share on BSE. The 52-week high of the scrip is recorded at Rs 124.75 and the 52-week low at Rs 43.15 on the BSE.

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