National Aluminium Company (NALCO) will declare its second quarter (July-September) results today. Analysts expect strong improvement in operational performance during the quarter on account of lower base in a year ago period, but topline may shrink on lower volumes.
According to a CNBC-TV18 poll, profit after tax is expected to rise over 30 times year-on-year to Rs 146.4 crore as against net loss of Rs 4.8 crore in the quarter gone by.
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Net sales are likely to decline 3 percent Y-o-Y to Rs 1,535 crore in three-month period ended September 2013 due to lower volumes from aluminum business though realisation is better because of weak rupee.
Analysts expect weaker rupee to drive higher aluminum and alumina realisations despite lower aluminum LME price.
They expect aluminum sales volumes to decline 11 percent sequentially to 75000 tonne due to shutdown of 198 smelters in Q1FY14 and constraints in supply of linkage coal from MCL. The company was forced to shut 198 pots out of 960 in the June 2013 quarter owing to coal unavailability.
Management guided for 3,00,000-3,20,000 tonne of aluminium output during FY14 as against 4,00,000 tonne in FY13.
However, aluminum realisation is expected to increase 6 percent Q-o-Q (despite weak LME) due to rupee depreciation against USD.
The mangament lowered aluminum sales as selling alumina outright is more profitable. Analysts expect Alumina sales of 3.15 lakh tonne, a growth of 11 percent quarter-on-quarter while realisation is likely to jump 4 percent Q-o-Q.
Earnings before interest, tax, depreciation and amortisation is expected to be at Rs 187 crore as against loss of Rs 24.1 crore Y-o-Y due to higher realisation in both aluminum and alumina segments in rupee terms.
Higher Alumina sales along with depreciating rupee are expected to support the margins. Analysts expect power and fuel cost to moderate compared to a year ago period. Operating profit margin is likely to be at 12.2 percent in second quarter as against negative 1.5 percent.
Analysts feel Utkal coal block is the key trigger for company's future profitability. Power cost will remain high till Utkal coal block gets commissioning.