Nalco share price gains on better-than-expected Q3 show

Nalco shares gained two percent in the early trade on February 14 as its third quarter profit surged 84 percent year-on-year despite muted topline growth.

At 9.15 am, Nalco was trading at Rs 145.01 on the NSE, up 2 percent for the previous session’s closing price.

The state-run alumina and aluminum manufacturer recorded consolidated net profit at Rs 470.61 crore for the December period despite muted topline growth, backed by strong operating numbers with fall in input cost and power & fuel cost, the company told exchanges on February 13.

Revenue grew by 1.5 percent year-on-year to Rs 3,347 crore for the quarter, in-line with Motilal Oswal’s estimate Rs 3,250 crore.

Motilal Oswal said adjusted profit surged ahead of its expectations of Rs 240 crore, driven by the strong operating performance and lower depreciation, partially offset by a higher tax outgo.

For the nine months ended December 2023, revenue stood at Rs 9,600 crore, down 9 percent YoY.

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The aluminium arm posted the best ever quarterly sales volume at 122kt (up 6 percent YoY), which was 6 percent higher than Motilal Oswal’s estimate of 115kt. Cumulative production volumes for 9MFY24 came in at 345kt, while sales volumes stood at 349kt.

To support the fifth stream of alumina refinery, Nalco is also setting up the Pottangi bauxite mine (reserves of ~75mt) and the same is expected to be operational by Q1FY26. The statutory clearances for the mine have been received.

“Until the fifth stream of alumina does not come on stream, we expect Nalco to operate at full capacity, leaving little room for capacity expansion for the next two years, and the next phase of growth is expected to commence once the additional 1mt stream of alumina refinery comes on stream by Jan-May’25,” said Motilal Oswal.

The brokerage reiterated its neutral rating on the stock with a revised target price of Rs 140.

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