NALCO (A NAVRATNA COMPANY)

National Aluminum Company Ltd. (NALCO )
CMP :- 65

COMPANY OVERVIEW :-

• National Aluminium Company Limited (NALCO) is a Navratna CPSE under Ministry of Mines.

• The Company is a group ‘A’ CPSE having integrated and diversified operations in mining, metal and power with sales turnover of Rs 7,933 crore in financial year 2016-17. Presently, Government of India holds 60.20% equity of NALCO.

• NALCO is one of the largest integrated Bauxite-Alumina-Aluminium- Power Complex in the Country.

•  NALCO has bulk shipment facilities at Vizag port for export of Alumina/Aluminium and import of caustic soda and also utilises the facilities at Kolkata and Paradeep ports. 

• The Company is low cost producer of metallurgical grade alumina in the World as per Wood McKenzie report.

• The Company’s export earnings accounted for about 46% of the sales turnover in the year 2016-17 and the Company was rated 2nd highest net export earning CPSE in 2015-16 as per Public Enterprise Survey report.

• NALCO is the first Public Sector Company in the country to venture into international market in a big way with London Metal Exchange (LME) registration since May, 1989.

source :- http://www.nalcoindia.com/Company-Profile.aspx 

Annual Report : - https://www.bseindia.com/bseplus/AnnualReport/532234/5322340317.pdf 

 

• Navratna CPSE National Aluminium Company Limited (Nalco) has signed an MoU with the Ministry of Mines, Govt. of India setting higher targets in production, productivity, turnover and CAPEX for the FY 2017-18.

• As per the MoU, the target for revenue from operations has been fixed at Rs.8100 crore (net of excise) which is Rs 700 cr more than previous year.

• The MoU has also set 100% targets for production of both bauxite and alumina i.e. 6.825 million tonnes and 2.1 million tonnes, respectively. Aluminium production target is set at 4.4 lakh tonnes as compared to the previous fiscal.

• The targets are an all time high for the company and is expected to push the profitability of NALCO despite increase in expenses on account of enhanced electricity duty, RPO obligations, employee wage revision and power & fuel oil.

• The Company has a CAPEX target of Rs.1158 crore against Rs.873 crore achieved in 2016-17. The expenses are to be incurred in several new and ongoing projects like the 1 million tonne refinery, Utkal-D&E coal blocks, solar and wind power projects, modernization and up-gradation of Plant & equipments. 

💢 FUNDAMENTALS :-

STOCK INFO
Market Cap	12080 Cr
P/E	8.93
52 W High/Low	97.65/60.75
Face Value	5
EPS	3.46
Book Value	52.80
Price/Book	1.18
Industry PE	27.61

SHARE HOLDING PATTERN
Promotors (GOVT OF INDIA)	60.20%
FII	7.13%
MF	8.96%
Public/NII	23.67%
TOTAL	100%

•  Highest Ever FII+DII Holding in Company of 28.82% at the End of  December-2017 Quarter.

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Source :- https://economictimes.indiatimes.com/national-aluminium-company-ltd/stocks/companyid-11997.cms 

• Some Big Mutual Fund houses are Holding Stocks in their best Mutual Fund schemes.

PEER COMPARISON :-

• Comparison to its peers, NALCO is available at very attractive valuation, at lower PE compared to industry average

💢 FINANCIALS  :- ANNUAL RESULT :-

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•          NET PROFIT INCREASING CONTINUOUSLY in 2016 TO 2017. 
•      EXPECTED SAME RETURN IN NEAR FUTURE YEARS
•       EPS CONTINUE INCREASING YOY FROM 2016 TO 2017 FROM 2.84 TO NOW 3.46. Expected EPS of 7 in March 2018.

  QUARTERLY RESULT :-

NALCO Q3 FY18 RESULT

•      QUARTERLY EPS HIGHEST 3.7 
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NALCO CORPORATE VIDEO

     GLOBAL ALUMINA PRICES AND IMPACT :- 

    Aluminum prices have been impacted by factors influencing both the demand and supply of the commodity in China, the world’s largest producer and consumer of the metal. 
     
    LME aluminum prices have averaged close to $2100 , around 18% higher than the average for last year.

    The Chinese government has been cracking down on aluminum smelters that are excessively polluting. The government’s efforts are expected to translate into the closure of around 4 million metric tons or around 10% of the country’s total smelting capacity. 

     Considering that China accounts for nearly 60% of global aluminum production, the closure of even a tenth of its production capacity significantly impacts the global balance of demand and supply.

     If U.S. President Donald Trump goes ahead with sweeping tariffs on steel and aluminum imports, it could lower profits for companies making everything from pickup trucks to canned soup, or result in higher prices for consumers.

    Trump has threatened a 25 percent tariff on steel imports and 10 percent on aluminum, without exemptions for any countries.

   

      

   http://www.business-standard.com/article/companies/nalco-s-alumina-exports-to-halve-in-3-4-years-to-impact-profit-margins-118011000850_1.html

     INVESTMENT RATIONALE :- 

•  National Aluminium Company has lined up projects with an investment of about Rs 25,000 crore. 

•  NALCO has introduced an all-weather New Business Model involving Expansion, Value Addition, Cost reduction and others.

• The Company is planning Nanotechnology-based defluoridation plant built at a cost of Rs 16.69 crore as unique, he said it makes NALCO the first company to adopt and commercialise the Emrion technology, globally and plans to extend use of the technology in various drinking water projects in fluoride endemic areas. 
  
  
  

• Though the Company alumina refinery at Damanjodi is all set to go for an expansion with an investment of over Rs 5,540 crore. This 
  shows a steady rise in the capacity utilisation, there is still an enormous untapped potential for aggressive expansion.

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