Nalco’s performance benefited considerably from favorable alumina prices, which continued the trajectory during the quarter, increased to 107% yoy and 38% QOQ to $ 703/ton.
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Damanjodi has achieved more than 70% physical progress in the fifth stream 1Mtpa alumina refinery expansion project of the National Aluminum Company Limited and now commercial production is expected to begin in the beginning of Cy27 by September-December 2025.
Utkal D&E full ramp-up of coal blocks will help meet more than 50% of its coal requirement through closure sources. These projects not only equip Nalco with backward integration and cost efficiency, but also offer remarkable growth drivers. Nalco currently sells about 1.3mt alumina externally through third party exports after completing a smelter requirement of approximately 0.9mt.
We estimate that 1.32mt/1.77mt external alumina sales in FY26e/FY27E estimates that you assuming that you get 50% use levels in FY27. Our alumina price perception is made at 17% of LME aluminum prices, which corresponds to a long -term average.
Current alumina prices of $ 530/ton are at ~ 20% aluminum price and we believe that markets and prices will proceed to achieve a permanent balance.
We modify our FY25/FY26/FY27 Ebitda by +23%/-46%/-by 28%factoring-
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More than one expected stabilization of alumina prices,
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The 5th stream refinery commission delay of two to three months, and
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Moderate use of extended capacity in FY 27.
We give NALCO importance five times with a revised target price of FY27e Ev/Ebitda (5.5x FY27E EV/Ebitda), Rs 264/shares.
We believe that recent stock price improvement has adopted a large -scale broad market movement, which gives more discounts to the performance of Nalco than a warrant, making it a suitable entry point on the attractive assessment of 3x FY27E EV/EBITDA Is. Maintain purchases.
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