Nalco to see limited impact on Odisha coal block: Goldman

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Moneycontrol Bureau

Goldman Sachs sees limited impact on National Aluminium Company's (Nalco) costs and utilisation after the government has allocated two coal blocks in Odisha to it. The Centre has allocated Utkal D and E coal blocks to  the aluminium major, which had already set up a 4.6 lakh tonne smelter and 1,200 MW Captive Power Plant in Odisha's Angul district.

"Nalco will use coal from these blocks for its captive power plant and will have to surrender an equal amount of linkage coal in lieu of this. Hence, we see limited impact on costs and utilisation," Goldman Sachs says in a note. However, the brokerage expects cost savings of about Rs 527 per tonnes of coal, around Rs 210 crore annually.

According to Goldman's estimates there is a limited potential valuation upside with a further capex of Rs 450 crore. It belives that smelter utilisation is unlikely to be impacted as the supply from these blocks will replace existing linkage supply while expect transportation costs are likely to be lower.

However, the stock is down over 2 percent intraday. At 11:53 hrs it was quoting at Rs 36.50, down Rs 0.75, or 2.01 percent on the BSE.

Posted by Nasrin SultanaFollow @NasrinzStory