Neutral Nalco; target of Rs 95: Motilal Oswal

Motilal Oswal recommended Neutral rating on Nalco with a target price of Rs 95 in its research report dated September 22, 2023.

Broker Research

September 26, 2023 / 10:24 IST

Neutral

26 Aug, 2025 12:21

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Motilal Oswal's research report on Nalco

NACL had successfully acquired Utkal D and E coal blocks , with a combined R&R of 175mt, aimed at improving NACL’s raw material security. Despite encountering multiple delays, NACL is all set to operationalize Utkal D coal mine by the end of CY23. This development is poised to provide NACL with an annual raw material security of approximately 2mt. NACL is in the process of establishing a fifth stream for its alumina refinery, which will enhance the capacity by an additional 1mt to 3.1mt by May’25. The full incremental benefits of this expansion are expected to materialize from FY26E onwards. NACL is operating at full capacity across 960 electrolytic potcells, which will help the company clock 460kt of metal production in FY24E. NACL is also setting up a 0.27mt caustic soda facility (in JV with GALK) at Dahej, Gujarat, which will further enhance its raw material integration.

Outlook

We believe that despite NACL currently operating at full capacity, the synergies arising from enhanced raw material security will propel EBITDA/APAT to exhibit a CAGR of 16% each until FY25E. NACL currently trades at 3.8x FY25E EV/EBITDA and appears to be fully priced in. We reiterate our Neutral rating on the stock with a TP of INR95.

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