NALCO Q1 net may dip 49% at Rs 115 cr: Motilal Oswal

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26 Aug, 2025 12:21

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Motilal Oswal has come out with its first quarter (April-June) earnings estimates for the metal sector. The brokerage house expects NALCOto report a 53.4 percent degrowth quarter-on-quarter (fall of 48.6 percent year-on-year) in net profit at Rs 114.6 crore.

Revenues are expected to decrease by 15.7 percent Q-o-Q (down 9.9 percent Y-o-Y) to Rs 1,574.8 crore, according to Motilal Oswal.

Earnings before interest, tax, depreciation and amortisation (EBITDA) are likely to fall by 55.5 percent Q-o-Q (down 38.4 percent Y-o-Y) to Rs 187.4 crore.

Motilal Oswal report on NALCO

Net sales to decrease 16 percent Q-o-Q on lower realization and volumes: We expect net sales to decrease 16 percent Q-o-Q (down 10 percent Y-o-Y) to INR 15.7 billion on lower aluminum volumes and realization. Aluminum sales volume is likely to decline 16 percent Q-o-Q to 82kt. Aluminum production has been affected due constraints in supply of linkage coal from MCL. NACL is operating at 25 percent lower capacity and the trend is likely to continue due to weak LME and lower linkage coal supply. Aluminum realization is expected to decline 6 percent Q-o-Q.

EBITDA to decrease 56 percent Q-o-Q: We expect EBITDA to decline 56 percent Q-o-Q to INR 1.9 billion. Operating performance will be affected due to lower realization and volumes.

Power cost to remain high till Utkal coal block commissioning: NACL's smelters are not producing at full capacity due to lower margins in aluminum business. Weak LME coupled with high power cost has been affecting margins so far. Linkage coal supply has been infrequent and unreliable adding to volatility in operating performance.

Till the commissioning of Utkal coal block (2mtpa), NACL will not be able to reap the full benefits of its increased refining and power capacity. The stock trades at 7.3x FY15E EPS and an EV of 1.8x FY15E EBITDA.