Nalco (NACL)’s revenue stood at INR29b in 1QFY25 (-10% YoY/-20% QoQ vs. our est. of INR39b). The miss was mainly due to the weak operational performance in the chemical business. Consolidated EBITDA stood at INR9.0b (YoY/QoQ: +57% /-16%) against our est. of INR11.3b during the quarter. EBITDA margin stood at 32.7% (our est. 26%) vs. 18.7% in 1QFY24 and 30.9% in 4QFY24, supported by healthy operating margin from the aluminum segment. APAT for the quarter stood at INR5.9b (YoY/QoQ: +76% /-13%) vs. our est. of INR7.4b. The Board declared a final dividend of INR2 per share for FY24.
OutlookAt CMP, NACL trades at 6.6x on EV/EBITDA and 1.8x on P/B and appears to be largely priced at current levels. We reiterate our NEUTRAL rating on the stock with a TP of INR185, valuing it at 7x FY26E EV/EBITDA.
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