Accumulate National Aluminium Co; target of Rs 100: Prabhudas Lilladher

Prabhudas Lilladher recommended accumulate rating on National Aluminium Co with a target price of Rs 100 in its research report dated November 10, 2023.

Broker Research

November 18, 2023 / 20:03 IST

Accumulate

26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on National Aluminium Co

National Aluminium (NACL) reported weak operating performance in 2Q on account of higher power and fuel expenses. Revenue was 4% below our estimates led by weak realization and sequentially reduced premium over LME in domestic markets. Power & fuel costs increased 14% QoQ (instead of expectation of a decline), which is mostly due to lower production from captive mine, higher initial opening cost of mine and high cost inventory of prior period. Going forward as mgmt. ramps up captive coal production, we expect coal costs to come down in 2H and expect improved performance with better alumina sales volumes. We believe NACL is pure play on alumina and aluminium prices given a) its 460ktpa smelting unit running at full capacity utilization, b) incremental alumina volumes expected to flow only in FY26E due to slow execution and c) overall progress on announced capex remains slow. However, ramping up of captive coal mines would reduce cost of production in the near term and development of strategic minerals would benefit in the long run. We cut our FY24E/FY25E EBITDA estimates by 8%/3% on weak 1H performance and introduce FY26 numbers.

Outlook

We expect Revenue/EBITDA/PAT growth of 2%/14%/12% over FY23-26E. At CMP, stock is trading at 5x/4.3x EV of FY25E/FY26E EBITDA. Retain ‘Accumulate’ rating with revised TP of Rs100 (earlier Rs97) valuing at 5xEV of Sept 2025E EBITDA, as we roll forward.

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