Buy National Aluminium Co; target of Rs 228: Prabhudas Lilladher

Prabhudas Lilladher is bullish on National Aluminium Co has recommended buy rating on the stock with a target price of Rs 228 in its research report dated August 08, 2025.

Broker Research

August 12, 2025 / 12:44 IST

buy

26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on National Aluminium Co

National Aluminum (NACL) reported weak operating performance in Q1FY26 on low pricing and higher other expenses. Alumina/metal volumes grew 3x/6% YoY to 304kt/113kt on weak base. Average Q1 alumina NSR declined 37% QoQ to USD 419/t, while that for metal declined 6% YoY to USD 2,791/t. RM costs increased led by an inch up in caustic soda prices, while other expenses were elevated on account of RPO obligation compliance costs and higher repairs/ coal transportation costs, leading to below estimate EBITDA delivery. Mgmt. reiterated FY26 alumina sales guidance at ~1.28mt, supported by higher refinery output and increased export shipments. Ongoing 1mtpa refinery expansion is expected to commence operations by Jun’25 now and mgmt. is targeting incremental 0.5mt/1mt alumina in FY27/28E supported by Pottangi bauxite mine. Captive coal mines are ramping up well and expected to cater to ~56% of coal requirements at full capacity in FY26. NACL is also looking to expand its value-added business, which, along with other cost-saving initiatives, will support margins. However, being a pure play on alumina/metal pricing, earnings remain closely tied to price movements.

Outlook

We raise FY26/27E EBITDA by 4%/3% adjusting for higher alumina volume assumptions. Maintain ‘Buy’ with revised TP of Rs228 (from Rs218, assigning same 5x EV/EBITDA multiple). At CMP, the stock is trading at 5.4x/4.1x EV of FY26/27E EBITDA.

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