NALCO stock hits record high after Kotak Institutional Equities' upgrade to 'add'

NALCO stock is up over 65 percent in the year so far.

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26 Aug, 2025 12:21

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Shares of National Aluminium Co surged 4 percent to hit a record high of Rs 218.72 on October 1 after brokerage firm Kotak Institutional Equities upgraded its rating on the stock to 'add', citing an  attractive risk-reward.

Alongside the rating upgrade, KIE also raised its price target for the stock by a whopping 58 percent to Rs 235, predicting a 12 percent upside potential from the current level. At 11.30 am, shares of NALCO were trading at Rs 216 on the NSE.

According to KIE, NALCO is best placed to benefit from the ongoing supply tightness in the alumina market, largely due to its net long position and the consequent tailwind in the aluminum prices.

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While the brokerage anticipates that increased production in China, fueled by restarts in Yunnan and weak global demand, will help alleviate the current aluminum deficit in the near term, they project that the market will remain structurally in deficit in the medium term.

Kotak's outlook is based on the expectation that, as China's production approaches its capacity limit of 45.5 mtpa—currently operating at a utilisation rate of 95 percent—steady demand growth driven by the energy transition will persist. To facilitate expansions in the medium term, the market will require incentive pricing beyond the current cost pressures, which is likely to work out in favor of NALCO.

On top of that, the commissioning of captive coal mines has helped reduce costs for NALCO in FY24, and a further ramp-up should keep costs on a downtrend, KIE believes.

Factoring in these growth triggers, KIE raised its EBITDA forecasts for NALCO by 8 percent for FY25, 11 percent for FY26, and 17 percent for FY27, primarily driven by changes in commodity price assumptions. Additionally, the firm now assigns a higher multiple of 7 times EV/EBITDA for NALCO, up from the previous 5.5 times, as the company enters a volume growth phase starting in FY27.

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