Shares of Navratna stock National Aluminium Company surged 5% following its impressive Q2FY25 results, showcasing a 415% jump in net profit and robust revenue growth.
Shares of National Aluminium Company Ltd (NALCO), a prominent Navratna enterprise in India’s aluminum sector, soared by up to 5% following the announcement of its stellar Q2FY25 financial performance. The company reported an impressive 415% year-on-year (YoY) increase in net profit and a robust 31% YoY growth in revenue, cementing its position as a leader in the industry.
Market Performance
NALCO’s market capitalization reached an impressive ₹41,085.45 crore as its shares traded at ₹225 per share, marking a 3% rise from the previous close of ₹219.80 apiece. The stock’s strong momentum reflects investor confidence in the company’s continued growth trajectory.
Key Financial Highlights
- Revenue Growth:
- YoY: Revenue surged 31%, climbing from ₹3,043 crore in Q2FY24 to ₹4,001 crore in Q2FY25.
- Quarter-on-Quarter (QoQ): Revenue increased 40%, jumping from ₹2,856 crore in Q1FY25 to ₹4,001 crore in Q2FY25.
- Profit Growth:
- YoY: Net profit skyrocketed 415%, rising from ₹206 crore in Q2FY24 to ₹1,062 crore in Q2FY25.
- QoQ: Net profit saw a significant 77% jump, moving from ₹601 crore in Q1FY25 to ₹1,062 crore in Q2FY25.
These remarkable figures highlight NALCO’s ability to capitalize on favorable market conditions and operational efficiencies.
Brokerage Recommendations
Prominent brokerage firm Emkay Global Financial Services has issued a ‘Buy’ recommendation for NALCO, setting a target price of ₹275 per share. This represents a 22% upside from the current price of ₹225 per share.
According to Emkay, NALCO is well-positioned to deliver stronger profits in Q3FY25, supported by elevated alumina prices and higher aluminum prices. The brokerage has identified three key drivers for the company’s long-term growth:
- Near-term price strength in aluminium and alumina.
- Expansion of 1 million tonnes per annum (mtpa) in alumina production.
- Strategic entry into captive coal mining to ensure cost-efficiency and sustainable growth.
These factors are expected to boost the company’s earnings momentum over the next 2-3 years.
Investor Returns (Navratna Stock)
NALCO has delivered an exceptional performance for its shareholders:
- 6-Month Return: The stock has gained 17.50% over the past six months.
- 1-Year Return: Investors have enjoyed a multi-bagger return of 137.39% over the last year.
An investment of ₹1 lakh in NALCO shares a year ago would now be worth ₹2.37 lakh, underscoring the company’s impressive growth potential.
Operational Achievements and Goals
Production Target:
For FY25, NALCO aims to maintain its aluminum production at 0.46 million tonnes, consistent with the previous year’s output. As of mid-August 2024, the company had achieved 97% capacity utilization, with 940 out of 960 pots operational at its smelter plant.
Capital Expenditure Plan:
The company has outlined a capex plan of ₹2,000 to ₹2,500 crore for FY25. This investment will focus on bolstering production capabilities while maintaining a healthy net cash position.
Company Profile
National Aluminium Company Limited is a government-owned Navratna company specializing in the production and sale of alumina and aluminum. The company operates through two primary segments:
- Chemical Segment: Produces calcined alumina, alumina hydrate, and other related products.
- Aluminium Segment: Focuses on aluminium manufacturing and distribution.
NALCO’s integrated operations and strategic initiatives have solidified its reputation as a leading player in the global aluminium industry.
NALCO’s remarkable financial performance, strategic investments, and robust operational efficiency have positioned it as a preferred choice for investors. With promising growth prospects driven by favourable market dynamics and strategic initiatives, the company is poised to deliver consistent returns in the coming years.