Neutral NALCO; target of Rs 190: Motilal Oswal

Motilal Oswal's research report on NALCO

1QFY26 revenue stood at INR38.1b (+33% YoY and -28% QoQ) against our est. of INR43.2b, driven by a softening in alumina prices and muted volumes. Consol. EBITDA came in at INR14.9b (+60% YoY and -46% QoQ) against our est. of INR16.8b amid muted NSR and sustained costs. EBITDA margin stood at 39.2% vs. 32.7% in 1QFY25 and 52.3% in 4QFY25. APAT was INR10.5b (+78% YoY and -49% QoQ), in line with our est. of INR10.9b, supported by lower finance costs and higher other income. The board recommended a final dividend of INR2.5 per share (~50% of the face value) in FY25.

Outlook

At CMP, NACL trades at 4.3x on EV/EBITDA and 2.1x on P/B. We reiterate our Neutral rating on the stock with a TP of INR190, valuing it at 4.5x EV/EBITDA on FY27E.